DC’s Latest Scheme to Slash Your Social Security Checks

Steve McDonald By Steve McDonald, Bond Strategist, The Oxford Club

Slap In The Face Award

Transcript:

This week’s “Slap in the Face” Award goes out to the millionaire boys club that seems to be running our Congress.

House Ways and Means Social Security Subcommittee Chairman Sam Johnson recently introduced a bill to “save” Social Security. And the legislation includes a proposal to cut benefits for those he identifies as “high earners” and “medium earners.”

You might want to sit down. This one is unbelievable.

First, the reasonable part… Johnson has proposed raising the full retirement age to 69. That seems OK.

Now the other side…

He wants to cut benefits for people he categorizes as “medium and high income earners.” And this is where this gets bad.

According to a recent write-up by MarketWatch, folks in the “low” and “very low” income groups ($12,280 to $22,105 annually) would basically lose nothing. The cuts he’s proposing for them are in the 0.5% to 1.7% range.

But he’s proposed a cut of 22.7% if you earn between $49,121 and $78,593. Johnson considers $49,000 to be a “medium” annual income level.

And proposed cuts of 60% would start at the “high earner” level for folks with $78,594 in annual income.

Once you hit $118,500 or more in annual income, the cut would be 66%.


Now, I can justify changes for those who are really making a lot of money. And what constitutes as “high income” varies… $200,000 to $300,000 per year or more seems pretty high to me.

But who in their right mind ever came up with the idea that someone earning just $49,000 is a medium earner and someone earning just $78,000 is a high earner?

This isn’t just bad, it’s stupid.

When you consider that the average monthly Social Security check is just $1,300, these cuts would reduce a medium earner’s check to around $1,000 per month.

Let’s suppose the so-called “high earners” (approximately $78,000 to $115,000) are receiving Social Security benefits in the $2,000 per month area, which is probably a little high. They’d be looking at a 60% cut, bringing their benefits down to $800 a month.

No person who has ever worked for a living would ever consider $78,000 to be high income. Depending on where you live, that isn’t even midlevel!

I doubt this bill will ever make it into law, but it’s scary that the D.C. insiders could be so out of touch with the rest of the world.

The Social Security payout system has to be changed, but come on, people earning $78,000 should take a 60% cut?

That’s nuts!

That’s all for this week.

Good investing,

Steve