Bitcoin vs. Social Security: Former Maryland Governor's Ponzi Scheme Remark Sparks Fury
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Yahoo
an hour ago
- Yahoo
Social Security Has a $67 Billion Problem. Should Current and Future Retirees Be Concerned?
The Social Security program is beginning to pay out more than it's bringing in. Social Security benefits could be cut by 23% in 2033 if the deficit continues at its current rate. Multiple factors are contributing to the Social Security deficit, including more retirees, longer life expectancy, and government inaction. The $23,760 Social Security bonus most retirees completely overlook › Social Security is one of America's most valued and important social programs, but unfortunately, it's facing a significant problem: The cost of the program is exceeding how much it's bringing in. Given the deficit that Social Security had in 2024, should current and future retirees be concerned? For most current retirees, no. However, if you're a current worker or approaching retirement, it's an issue worth keeping an eye on, because potential changes to Social Security will eventually affect you. Let's look at the $67 billion issue that Social Security is facing. To better grasp Social Security's issue, it's important to understand how Social Security's funding works. Social Security is primarily funded through payroll taxes. The current rate is 12.4%, with both employers and employees paying 6.2% each (self-employed people are responsible for the full 12.4%). This money is then put into the Social Security Trust Fund, which consists of two parts: The Old-Age and Survivors Insurance (OASI) Trust Fund, and the Disability Insurance (DI) Trust Fund. The OASI program is responsible for paying benefits to retirees, their families, and survivors of deceased recipients. The DI program is responsible for paying benefits to disabled workers and their families. In theory, working-age people pay into the system to support current retirees, with the understanding that other working-age people will do the same for them once they're in retirement. The Social Security Administration's (SSA's) 2025 Social Security Trustees Report noted that the Social Security program cost $1.485 trillion in 2024, while only bringing in $1.418 trillion. That resulted in a $67 billion deficit for the year. According to the report, the OASI trust fund could be depleted by 2033, at which point Social Security would only be able to pay 77% of its expected benefits. A recent study by the Senior Citizens League (TSCL) estimated that about 21.8 million retirees rely solely on Social Security for income. So a 23% drop in benefits is far from ideal. At the current rate of depletion, the Social Security Trust Fund could be underfunded by more than $25 trillion through 2099. Without changes, Social Security would need to cut benefits by about 23% beginning in 2034. There are a few factors contributing to the Social Security deficit, but here are four key ones: An influx of retirees: Baby boomers are retiring in large numbers without enough workers in the workforce replacing them (and paying into the Social Security program). People are living longer: You don't stop receiving Social Security until you pass away, so as people live longer, they collect benefits longer, increasing Social Security's costs. Income for the lower and middle classes is stagnant: Only income up to a certain amount is subject to Social Security payroll taxes ($176,100 in 2025). This means that as high-earners begin earning more, they're paying less of their income into the program. Less interest earned on reserves: Social Security reserves are put into Treasury bonds to earn interest. However, interest rates were historically low for a considerable period, limiting the amount of interest Social Security could earn on its reserves. The good news is that this isn't the first time Social Security has faced funding issues, and the federal government was able to address the problem. The bad news is that it's going to take bipartisan government action to resolve the funding shortfall, and there haven't been many encouraging signs of this happening in the immediate future. In the meantime, current workers should prepare for the worst and hope for the best. This could mean increasing contributions to retirement accounts, investing more actively, and preparing for Social Security to potentially account for a smaller portion of your retirement income than previously expected. Regardless of what happens, it's always better to be overprepared than underprepared. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Social Security Has a $67 Billion Problem. Should Current and Future Retirees Be Concerned? was originally published by The Motley Fool
USA Today
an hour ago
- USA Today
When would Trump's tax and spending bill go into effect?
Different provisions of the GOP tax and spending bill will kick in over the next year or so. Many are set to expire just before Trump leaves office. When the GOP's tax and spending bill goes into effect isn't an easy question to answer. The nearly 900-page bill covers a wide swath of government spending beyond the high-profile topics like Medicaid and tax cuts, and provisions take effect at different times. Republicans are working to get the bill approved in the House so it can get to President Donald Trump's desk by July 4. Here are some of the key start dates and end dates outlined in the bill: Medicaid Millions of Americans are expected to lose Medicaid coverage due to a drop in Medicaid payments to states and an increase in paperwork tied to new work requirements for low-income and disabled people who qualify. But when exactly people will lose coverage remains unclear and likely to vary by state. Nationwide Medicaid work requirements take effect Jan. 1, 2027, shortly after the mid-term elections decide which party controls Congress. The legislation requires "able-bodied" Medicaid recipients to work 80 hours a month or qualify for an exemption, such as being a student, caregiver or having a disability. The work requirement applies to parents of children older than 13. Tax rates The bill permanently extends the tax cuts introduced in the 2017 Tax Cuts and Jobs Act, which were set to expire this year. There should be no disruption in their application if the bill is signed. Most Americans are expected to continue to see tax cuts, with high-income households – which tend to pay more taxes – seeing the largest gains. More: Will Trump's big tax bill help or hurt you? Why it could depend on your income SALT The cap on the federal deduction for state and local taxes, known as SALT, would be raised to $40,000 starting in 2025, meaning people can deduct from their federal taxes as much as $40,000 of what they pay to their state and community. That benefit starts to phase out for people who earn more than $500,000. In 2030 the increased deduction ends and the $40,000 limit would revert to $10,000. Tips and overtime No tax on tips or overtime are promises Trump made on the campaign trail when he was running for a second term. Workers will be able to deduct up to $25,000 in tips and up to $25,000 in overtime, but the tax law change is temporary and ends Dec. 31, 2028, right before he leaves office. Child Tax Credit Under current law, the maximum child tax credit is $2,000, which would have reverted to $1,000 after 2025. The GOP's spending bill would permanently raise that maximum credit to $2,200 starting in 2025 and tie the amount to inflation going forward. There is no end date to the increase. Social Security tax deduction Only some Social Security beneficiaries will be able to deduct Social Security payments from their taxes, which was also a promise Trump made on the campaign trail. This deduction is also temporary. It would last from 2025 to 2029. The bill includes a temporary $6,000 deduction for those over age 65 and eliminates Social Security tax liability for seniors with adjusted gross incomes of $75,000 or less or $150,000 if filing as a married couple. The lowest-income seniors who already don't pay taxes on Social Security, those who choose to claim their benefits before they reach age 65 and those above a defined income threshold could not claim the deduction.
Yahoo
2 hours ago
- Yahoo
See the changes the Senate made on GOP tax and spend bill
The Senate made several substantive changes to the House version of the GOP spending bill that the White House has decreed to be a must-pass. The modifications created a bill that had just enough support to pass the Senate with a tie breaking vote by Vice President JD Vance. House leaders have said they are unhappy with the changes but will ultimately have to accept them if they want to meet the July 4 deadline set by President Donald Trump. Here are some of the changes the Senate made to the bill: Senate Republicans removed a provision in the House version of the bill that would have restricted judges' ability to hold people accountable for violating court orders. In recent months some judges have considered contempt rulings against the Trump administration for ignoring court orders that restricted the administration's actions. The legislation would bar judges from enforcing such contempt rulings if they didn't first order a bond, which is commonly set at zero or not ordered in cases when people are claiming the government did something unconstitutional. Democrats say it's an attempt to limit the power of the courts, while Republicans say it was an incentive to stop frivolous lawsuits by requiring plaintiffs to pay in. The Senate version allows mixed-status immigration status families to quality for the child tax credit for American citizen children. Currently, children with Social Security numbers, the vast majority of whom are American citizens or legal permanent residents, are eligible for the Child Tax Credit, even if their parents lack Social Security numbers, according to the Center for Migration Studies. The Senate version, requires at least one parent to have a Social Security number to qualify. The House version required both parents to have valid Social Security numbers to qualify, which would have kept millions of children from getting the benefit. The Center for Migration Studies estimated this would have impacted 4.5 million citizen and legal permanent resident children. Senate Republicans stripped out a provision in the House bill that would have blocked states from creating new regulations to shape how artificial intelligence is used or developed for the next 10 years. It would have also blocked dozens of states from enforcing AI regulations and oversight structures already in place. There is now no federal AI regulation to take the place of state policies, which are likely to vary across the country. Senators removed a portion of the bill qualifying sports and fitness expenses as qualified medical care, which would have allowed people to pay for them tax-free through a Health Savings Account. The benefit, worth $500 for an individual or $1,000 per couple, could not have been used at "a private club" owned by members, or a facility that offers golf, hunting, sailing or riding facilities. The health and fitness part of the business also couldn't be "incidental to its overall function and purpose." Senators also removed a provision that would have created a new income tax credit for some people who earned a Purple Heart – the decoration for service members who were wounded or killed in action. Purple Heart recipients who lost a portion of their Social Security disability benefits because they got a job could have also gotten a higher Earned Income Tax Credit to make up those lost Social Security benefits. The Senate also pulled out a change to the Pell Grant program, which provides federal aid to low-income students to attend colleges and universities. Right now, students are considered full time and qualify for the maximum amount of aid if they take 12 credits a semester. The House version of the bill would have changed that to 15 credits a semester, which the National College Attainment Network estimated would result in a nearly $1,500 cut in benefits for students who can't increase their courseload because of work or caretaking responsibilities. The Senate left the 12-credit requirement intact. This article originally appeared on USA TODAY: How did the Senate change the GOP tax and spend bill?
