An article at The Motley Fool that was also posted at Retirely — a financial planning company — about big changes coming to Social Security caught my eye: “3 Big Social Security Changes Coming in 2025 May Surprise Many Americans.”
Social Security is the federal Old-Age, Survivors, and Disability Insurance (OASDI) program that provides monthly benefits for retirement, disability, survivorship, and death to about 65 million Americans, including survivors and dependents. According to the Social Security Administration (SSA), the average monthly Social Security benefit in 2023 was $1,827 for an individual and $2,972 for an aged couple who both received benefits.
The “Key Points” of the article are:
- Social Security benefits will get a cost-of-living adjustment to help recipients keep up with rising prices across the economy.
- The maximum taxable earnings limit will increase, meaning some workers will owe more in Social Security payroll taxes.
- The retirement earnings test amounts will increase, such that some Social Security recipients will have some benefits withheld.
These are not “big changes,” and they shouldn’t surprise any Americans. This is because:
- Social Security benefits get a cost-of-living adjustment (COLA) every year.
- The Social Security maximum taxable earnings limit increases every year.
- The Social Security retirement earnings test amounts increase every year.
Since 1975, Social Security beneficiaries have received COLA adjustments almost every year (there was no COLA in 2010, 2011, and 2016) based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA was 3.2 percent in 2024.
Social Security is funded by a 12.4 percent payroll tax (split equally between employers and employees) on the first $168,600 of employee income. For tax year 2023, the Social Security wage base was $160,200. The Social Security Board of Trustees estimates that the taxable maximum will rise to $174,900 next year.
Americans who opt to take early Social Security benefits before their full retirement age will have some of their benefits temporarily withheld if they continue to work and their earnings exceed thresholds known as the retirement earnings test exempt amounts. In 2024, the cap on earnings is $22,320. Beneficiaries under full retirement age in 2024 will have $1 in benefits withheld for every $2 in earnings that exceed this cap. The Social Security Board of Trustees estimates that limit will rise to $23,280 next year.
So much for the “big Social Security changes” that will come in 2025.
But here are three big Social Security changes that should come in 2025:
- Abolish Social Security COLAs
- Abolish Social Security taxes
- Abolish Social Security benefits
First, regarding Social Security COLAs, the vast majority of Americans believe that retirees are entitled to Social Security benefits because they paid into the system their whole working lives. They therefore earned their benefits and are just receiving their contributions back with interest. But Social Security has no real trust fund and earns no interest or return. Neither does each American have a physical lock box or a digital account with their name on it. Money paid into the system by working Americans is simply spent on benefits for current retirees, unconstitutional agencies and programs of the federal government, and the latest government boondoggles. Social Security is therefore just another welfare program like food stamps, Temporary Assistance to Needy Families (TANF), or Supplemental Security Income (SSI). As a welfare program, its payments should never be increased. If anything, they should be decreased.
Second, regarding Social Security taxes, Social Security benefits received by retirees don’t correspond to the Social Security taxes paid by those retirees when they were working. Benefits are calculated by an arbitrary formula, loosely based on one’s earnings, and Congress can change those benefits at any time and for any reason. If the Social Security taxes extracted from Americans’ paychecks were called simply “payroll taxes,” then the notion that Social Security is not just another form of welfare would vanish overnight. The reality is that Social Security taxes collected just go into the general fund. Because all taxation is theft no matter what it is designated for, Social Security taxes should be abolished just like all other forms of taxation.
And third, regarding Social Security benefits, because the federal government is not authorized by the Constitution to have a welfare program, a safety net, a retirement program, or a disability program; and because Social Security is an intergenerational, income-transfer, wealth-redistribution welfare program that takes money from those who work and gives it to those who don’t, no Social Security benefits should be paid.
These are the big Social Security changes that should come. Anything else is merely perpetuating the welfare state.
