Latest news with #CenterOnBudgetAndPolicyPriorities
Yahoo
25-05-2025
- Business
- Yahoo
Social Security Retired-Worker Benefits Are Set to Make History Next Week
Social Security has been doing its part to pull retirees above the federal poverty line and provide monthly income to help aging workers make ends meet. The average monthly payout to retired workers is set to make history -- but it's no reason to celebrate. A Social Security dollar simply isn't what it used to be. The $23,760 Social Security bonus most retirees completely overlook › When the Social Security Act was signed into law in 1935, its purpose was to provide a financial foundation for America's aging workforce. Nine decades later, this mission is still being fulfilled, with the added bonus of also providing protections for workers with disabilities and survivors of deceased workers. Based on an analysis from the Center on Budget and Policy Priorities, Social Security was responsible for pulling 22 million people out of poverty in 2023, which is more than any other social program. Nearly three-quarters of these 22 million people were aged 65 and above. For most retired-worker beneficiaries, their monthly payout is more than just income -- it's a necessity. According to 23 years of annual surveys by Gallup, Social Security income helps between eight and nine out of every 10 retirees cover at least some portion of their expenses. Next week, when the calendar officially flips to June, Social Security retired-worker benefits will do something that's never been seen in the program's 90-year history. Every month, the Social Security Administration (SSA) publishes a "Monthly Statistical Snapshot" that intricately breaks down where benefits paid in the previous month ended up. For example, the April statistical snapshot shows that $128.736 billion in traditional Social Security benefits were doled out to 69.378 million people. Retired workers account for nearly 76% of all beneficiaries (52.587 million), with disabled workers (7.156 million) and survivor beneficiaries (5.841 million) comprising much of the remainder. If you're wondering why these three numbers don't add up to 69.378 million, it's because spouses, children, and other direct relatives may qualify for benefits on behalf of a retired, disabled, or deceased worker. In addition to breaking out how many beneficiaries received a payment, Social Security's monthly snapshot provides the average monthly benefit for each category. Spanning all beneficiaries, the average payout was $1,855.57 in April. But it's the average monthly benefit for retired workers that's just a week away from making history. Last month, retired-worker beneficiaries took home an average check of $1,999.97. However, this average monthly payout isn't static. Every month, new beneficiaries are entering the pool to receive their first monthly Social Security check, and some beneficiaries pass away. Additionally, higher nominal wages paid to working Americans over time, coupled with the impact of near-annual cost-of-living adjustments (COLAs), directly affect the average monthly take-home pay for retired-worker beneficiaries. Due to these factors, the average retired-worker benefit has always risen on a month-to-month basis, based on more than a decade of published SSA statistical snapshots. Sometimes, these increases are pronounced, such as the jump from an average payout of $1,980.86 for retired workers in February 2025 to $1,999.97 just two months later. This $19.11 increase spanning just two months potentially signals a big uptick in workers filing for benefits. More often, the average retired-worker payout grows by $1 to $2 on a month-to-month basis, not including the one month each year when COLAs are implemented. With the expectation that this trend remains intact, the average Social Security retired-worker benefit in May, based on the soon-to-be-reported June statistical snapshot, will surpass $2,000 for the first time in history. It's a psychologically important figure for a program that serves as a financial foundation for many aging workers. But uncorking the champagne isn't advisable just because Social Security is making history. While nominal monthly payouts for retirees continue to climb, they've been doing so at a considerably slower rate than the inflationary pressures retirees have been contending with for a quarter of a century. Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became Social Security's inflationary measure for doling out annual cost-of-living adjustments. With over 200 spending categories, all of which have their own respective weightings, this index can be whittled down to a single figure at month's end, which makes for easy year-over-year comparisons to see whether collective prices are rising (inflation) or falling (deflation). Though everything sounds kosher on paper, the CPI-W has done retirees no favors. As its full name implies, the CPI-W is focused on the spending habits of "urban wage earners and clerical workers." These are typically working-age people who aren't currently receiving a Social Security benefit. More importantly, working-age folks and retirees tend to spend their money very differently. Whereas the former spends more on education, apparel, and transportation, seniors spend a higher percentage of their monthly budget on shelter and medical care services than the typical working American. Even though an overwhelming majority of Social Security beneficiaries are aged 62 and above, the inflationary index used to calculate annual COLAs isn't properly weighting shelter and medical care services to their needs. The result? According to a May 2023 analysis from nonpartisan senior advocacy group The Senior Citizens League (TSCL), the purchasing power of a Social Security dollar dropped by 36% from January 2000 to February 2023. A more recent analysis from TSCL points to a 20% loss of buying power for Social Security income between 2010 and July 2024. Even though Social Security retired-worker benefits are breaking above psychological barriers, retirees are more often than not witnessing the buying power of their Social Security income dwindle over time -- and that's nothing to celebrate. 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 Retired-Worker Benefits Are Set to Make History Next Week was originally published by The Motley Fool
Yahoo
24-05-2025
- Business
- Yahoo
President Donald Trump Wants to Give Half of All Social Security Retirees a Raise -- but It Can Backfire
America's leading retirement program is facing a $23.2 trillion long-term funding shortfall, as well as the possibility of sweeping benefit cuts by 2033. Trump has a popular plan to put more money into the pockets of half of all Social Security retirees. Though the president's plan would yield near-term rewards for select retired-worker beneficiaries, it would come at a steep cost. The $23,760 Social Security bonus most retirees completely overlook › For an overwhelming majority of retirees, Social Security represents more than just a monthly check. It's a financial lifeline that they'd struggle to make do without. According to the Center on Budget and Policy Priorities, Social Security pulled 22 million people above the federal poverty line in 2023, more than 16.3 million of which were aged 65 and over. Meanwhile, 23 years of annual surveys by Gallup have found that 80% to 90% of retirees rely on their Social Security income, in some capacity, to cover their expenses. Nothing is more important to America's aging workforce than preserving the financial health of Social Security -- and strengthening the program begins at the top, with President Donald Trump. Though Trump has primarily maintained a hands-off approach with Social Security and focused on efficiency-based cost-cutting initiatives, he has one mammoth change in mind that would, ultimately, give half of all retired-worker beneficiaries a raise. Unfortunately, it's also a proposal that's ripe to backfire. In January 1940, the very first Social Security retired-worker benefit check was mailed. Every year since then, the Social Security Board of Trustees has published a report that intricately details the inner workings of the program. These annual reports allow the public to peruse how every dollar in income is collected, as well as trace where those dollars end up. But what tends to be even more insightful with these annual reports are the forward-looking projections. These forecasts take into account ongoing demographic shifts, along with changes to fiscal and monetary policy, to determine how financially sound Social Security will be 75 years following the release of a report (i.e., the Trustees' definition of the "long term"). In each of the last 40 years, the Trustees have pointed to a long-term funding obligation shortfall. Put plainly, projected income collected in the 75 years following a report isn't expected to be sufficient to cover outlays, which primarily includes benefits but also accounts for the administrative expenses to oversee the program. As of the 2024 Trustees Report, this 75-year funding shortfall stood at $23.2 trillion -- and this figure has been growing with consistency over time. The more pressing concern is the asset reserves of the Old-Age and Survivors Insurance Trust Fund (OASI), which are estimated to be depleted by 2033. The OASI's asset reserves represent the excess cash built up since inception that hasn't been paid out as benefits or used to cover administrative expenses. This excess income is currently invested in special-issue, interest-bearing government bonds, as required by law. If lawmakers fail to act and the OASI's asset reserves run out, retired workers and survivors of deceased workers would be facing an up to 21% reduction in their monthly benefit eight years from now. Donald Trump oversaw a number of Social Security changes during the first 100 days in office of his second nonconsecutive term. However, these efficiency-driven measures aren't going to put a dent in either the $23.2 trillion long-term funding shortfall, or meaningfully address the expected exhaustion of the OASI's asset reserves in 2033. But the president does have a proposal to get more money into the pockets of seniors. In a July 31 social media post on Truth Social, then-candidate Trump proclaimed in all capital letters, "Seniors should not pay tax on Social Security." In recent weeks, he's doubled down on his sentiment that retirees shouldn't be taxed on the Social Security benefits they receive. While speaking at a town hall event, the president said, In the coming weeks and months, we will pass the largest tax cuts in American history -- and that will include no tax on tips, no tax on Social Security, and no tax on overtime. It's called "The One, Big, Beautiful Bill." In 1983, with Social Security's asset reserves virtually exhausted, a bipartisan Congress passed, and then-President Ronald Reagan signed, the Social Security Amendments of 1983 into law. This amendment gradually increased the full retirement age and payroll taxation on working Americans, as well as introduced the utterly despised tax on benefits. When the taxation of benefits went into effect in 1984, up to 50% of benefits could be subjected to the federal tax rate when provisional income (adjusted gross income + tax-free interest + one-half of benefits) surpassed $25,000 for single filers and $32,000 for jointly filing couples. A decade later, a second tier was added allowing up to 85% of benefits to be subject to federal taxation if provisional income for single filers and couples filing jointly topped $34,000 and $44,000, respectively. When this tax went into effect in 1984, it was expected to affect approximately 10% of all senior households. But because these income thresholds haven't been adjusted for inflation since their respective inceptions decades ago, around half of all senior households now pay some level of tax on the benefits they receive. If President Trump is successful in eliminating this hated tax, he would be giving roughly half of all retirees a raise (in the sense that they would no longer have to pay tax on some portion of their benefits). On the surface, there would be plenty of support from current and future retirees to end the taxation of benefits. An overwhelming majority of retirees in an informal poll conducted by The Senior Citizens League believe Social Security benefits shouldn't be taxed. Unfortunately, this well-intentioned plan to put more money into the pockets of around half of all current Social Security retirees would be a short-term relief that leads to an even bigger long-term issue. To combat the OASI's declining asset reserves, America's leading retirement program needs every cent in income it can collect. At the moment, Social Security generates its income three ways: More than 91% of the $1.35 trillion collected in 2023 came from the 12.4% payroll tax on earned income, which includes wages and salary but not investment income. In 2025, all earned income up to $176,100 is subject to the payroll tax. Approximately 5% derives from the interest income earned on the OASI's and Disability Insurance Trust Fund's (DI's) asset reserves, which as previously noted are invested in interest-bearing government bonds. The remainder of Social Security's income comes from taxing Social Security benefits. The good news is that the lion's share of Social Security's income will continue to be sourced from the payroll tax. As long as Americans keep working and paying their taxes, there will always be funds for the Social Security Administration to distribute to eligible beneficiaries. On the other hand, the program's interest income will dwindle as the OASI's asset reserves are steadily exhausted. The interest income generated from the DI's asset reserves represents a very small piece of the pie. Removing the tax on benefits, with Social Security's interest income expected to diminish over time, would financially cripple the program. Based on estimates from the 2024 Trustees Report, the income generated from taxing benefits is expected to jump from $50.7 billion in 2023 to $132.8 billion in 2033. While half of all retirees -- the half with the highest provisional income -- would enjoy a brief raise, the OASI's asset reserves would be drained even faster without income from the taxation of benefits. In plain English, Trump's plan would speed up the benefit-cut timeline and potentially increase the percentage benefits would need to be reduced by (i.e., more than the current estimate of a 21% cut) to sustain the program for 75 years. It goes to show that what's popular isn't always the best solution. 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. President Donald Trump Wants to Give Half of All Social Security Retirees a Raise -- but It Can Backfire was originally published by The Motley Fool
CBS News
16-05-2025
- Business
- CBS News
How much would Americans of different income save in taxes if the GOP bill is signed into law?
The White House on Friday touted a Republican-backed tax bill as delivering "PERMANENT tax cuts and bigger paychecks." Yet experts say the legislation would disproportionately benefit the highest income earners, while offering far more modest gains to Americans lower down the ladder. If the bill is passed, households with more than $1 million in annual income would see their after-tax earnings rise by 4.3%, according to a new analysis from the Center on Budget and Policy Priorities (CBPP), a public policy think tank. The lowest-earning 20% of Americans would receive the smallest boost — their after-tax incomes would rise 0.6%, or an average of $90 annually, CBPP found. Other analyses have reached similar conclusions. The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, forecasts that the bottom 20% of Americans would see a 0.6% increase in after-tax income under the House tax bill, compared with a 3.7% increase for the top 20%. The fate of the GOP tax bill is unclear after five Republican members of the House Budget Committee on Friday voted against advancing the measure, dubbed the "one big, beautiful, bill," saying the legislation does not do enough to slash federal spending. Such projections don't include the impact of cuts to federal programs such as Medicaid and food stamps, which support many low- and middle-income households. Under the GOP bill, those services could face steep cuts, potentially bumping millions off Medicaid by adding work requirements and cutting federal funding provided to states to support the health care program. Those cuts could leave many low-income households worse off even after accounting for lower taxes, according to another analysis released Friday from the Penn Wharton Budget Model, a University of Pennsylvania research group that analyzes the fiscal impact of public policies. The bottom 20% of households, who earn up to about $17,000 annually, would see their after-tax incomes drop by $1,035 in 2026, including a reduction in government benefits, the nonpartisan group found. The top 0.1%, who earn at least $4.3 million per year, would get an annual after-tax boost of about $389,000, Penn Wharton said. The White House took issue with the CBPP and Penn Wharton analyses. "Once again, the experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said White House spokesman Harrison Fields in an email to CBS MoneyWatch. He added, "These experts should be embarrassed to share their 'expertise,' considering the egg still on their faces. MAGAnomics transcends conventional wisdom, and the President's One, Big, Beautiful Bill will continue to prove the haters wrong." The White House pointed to an analysis from the Joint Committee on Taxation that estimated the average tax bill would decline 11.1% in 2027 under the GOP legislation. The nonpartisan panel, which assess the impact of legislation for Congress, found that the biggest tax decrease would go to people earning $15,000 to $30,000, with a decline of 21.1%, while those earning more than $1 million would decline 8.6% Tariff impact Because low-income households spend a bigger share of their income on basics like food and clothing than wealthier Americans, they are likely to take a bigger financial hit from tariffs, experts including the nonpartisan Yale Budget Lab have said. That could effectively wipe out the benefits from the tax cuts, according to some analysts. If inflation rises as a result of higher tariffs and tax cuts, the bottom 20% of U.S. households would lose $100 per year, largely due to paying higher costs for consumer goods that are imported from other countries, the CBPP found. Because tariffs are taxes on imports paid by U.S. businesses, they typically pass on the cost of such duties to consumers by raising prices. "If we add just the effects of the tariffs the Trump Administration has put in place, the plan would still boost the rich while leaving the lowest-income people worse off because their tax cuts are so small," Brendan Duke, senior director for federal fiscal policy at the CBPP, said in a post. Counting the impact of tariffs, the top 1% of households would still see their after-tax incomes increase by 3%, or almost $45,000, the think tank estimated. That analysis doesn't include the impact of cuts to services like Medicaid or food stamps. On Thursday, Walmart said it plans to hike prices this month to offset the cost of new tariffs introduced by the Trump administration. Extending the 2017 tax cuts As well as calling for deeper cuts in federal spending, the Republican lawmakers blocking the tax bill also want to move up work requirements for some Medicaid recipients, which under the current bill wouldn't kick in until 2029. Other Republicans want a bigger deduction cap on state and local taxes, known as SALT, that can be applied on people's federal tax returns. The bill increases the cap on the deduction from $10,000 to $30,000. But the bill's basic outline for cutting taxes isn't a focus of debate among Republicans, who are seeking to extend Mr. Trump's 2017 Tax Cuts and Jobs Act. The bill would also add a host of other cuts, such as eliminating taxes on workers' overtime pay and tips, while also providing a more generous standard deduction.
Al Jazeera
13-05-2025
- Politics
- Al Jazeera
Did Hakeem Jeffries overstate share of veterans using food stamps?
The leader of the Democrats in the United States House of Representatives, Hakeem Jeffries, has slammed House Republicans for considering cuts to federal safety net programmes, pointing out that they would impact veterans. 'About 20 percent of households with veterans rely upon supplemental nutritional food assistance,' the representative for New York's 8th Congressional District said on Thursday, referring to the Supplemental Nutrition Assistance Program (SNAP), sometimes called food stamps. Jeffries's statement followed news reports that House Republicans are pushing to limit future SNAP benefit increases, add additional work requirements and shift some SNAP costs – which historically have been entirely paid by the federal government – to states. Jeffries cited an inaccurate figure. The share of veterans relying on SNAP benefits is about 8 percent, according to an April 2 report from the Center on Budget and Policy Priorities, a liberal think tank. Jeffries's office did not provide evidence to back up his statement. The Center on Budget and Policy Priorities report cited Department of Agriculture data showing that 11 percent of veterans aged 18 to 64 nationwide experienced food insecurity from 2015 to 2019. The department defined food insecurity as 'limited or uncertain access to enough food' because of a lack of economic resources. The department found that veterans were 7 percent more likely than nonveterans to experience food insecurity after controlling for a range of socioeconomic and demographic characteristics. The centre's report used US Census Bureau data from 2021 to 2023 to estimate the number of veterans living in households that received any SNAP benefits during the 12 months before being surveyed. The report estimated that more than 1.2 million veterans lived in households receiving SNAP benefits, which is 8 percent of the total population of 16.2 million US veterans during that period. Luis Nunez, a research analyst with the Center on Budget and Policy Priorities and author of its report, said the 8 percent covers all veterans whether they live alone or with others. The highest percentage of veterans on food stamps in any state was 14 percent in Oregon, followed by 11 percent in Louisiana, New Mexico and West Virginia. Data from a few years earlier showed lower percentages than the Center on Budget and Policy Priorities report. The Rand Corporation think tank studied data from 2015 to 2020 and found 4.9 percent of veterans nationwide lived in households receiving SNAP benefits at some point in the previous 12 months. A 2022 Government Accountability Office report found 6.5 percent of all veterans received SNAP benefits in 2019. And the Agriculture Department found that in 2018 and 2019, the average was 6.6 percent. Jeffries said, 'About 20 percent of households with veterans rely upon' the Supplemental Nutrition Assistance Program. An April 2 study found that 8 percent of veterans in the US rely on SNAP benefits. No state had a share higher than 14 percent. Studies with data from a few years earlier show rates from 4.9 percent to 6.6 percent. There's an element of truth that veterans face food insecurity at a higher level than nonveterans. But the statement ignores critical facts that would give a different impression. So we rate the statement mostly false.
