Democrat Group “The Third Party” Proposes Huge Changes For Social Security

Posted By on November 29, 2010

We are all going to be real frugal if this plan see’s the light of day!  Currently, individual retirees with $34,000 in outside income and couples with $44,000 must pay taxes on 85 percent of their benefits. The Third Way plan would require individuals earning $50,000 a year and couples receiving $60,000 to pay taxes on 100 percent of the benefit. 

A Democratic-led policy group is proposing changes in Social Security that party members have resisted for years in an effort to pave the way for recommendations this week by President Barack Obama’s deficit- cutting commission.

Washington-based Third Way said its plan would raise the retirement age, trim or eliminate Social Security benefits for high-income retirees, limit cost-of-living increases and provide money to help young workers create private retirement accounts.  The proposal, to be released after the presidential panel is due to issue its report on Dec. 1. “Whatever comes out of the commission is going to be a hot potato,” Gibbons said. “So we wanted to send something over that was especially hot.”

Social Security costs will exceed tax revenue beginning in 2015, according to the trustees’ 2010 report. The shortfalls will be covered by the plan’s trust fund until 2037, when those reserves are projected to be exhausted. Over the next 75 years, the trust fund would need another $5.4 trillion in current dollars to pay all scheduled benefits.

Currently, individual retirees with $34,000 in outside income and couples with $44,000 must pay taxes on 85 percent of their benefits. The Third Way plan would require individuals earning $50,000 a year and couples receiving $60,000 to pay taxes on 100 percent of the benefit.

Social Security benefits would be reduced on a scale starting at individuals with $150,000 in outside income and couples with $250,000, and eliminated altogether for individuals earning $200,000 and couples with $400,000 in income.

The retirement age, now scheduled to rise to 67 in 2027, would gradually increase to 68 by 2041, to 69 by 2059, and to 70 by 2077. This would reduce total benefits by roughly $1 trillion by 2040, according to the plan.

The plan would provide annual subsidies of up to $500 to help workers under age 30 create 401(k)-style retirement savings accounts.

More at: http://www.bloomberg.com/news/2010-11-29/wealthy-would-have-social-security-trimmed-in-proposal-by-democratic-group.html

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