The Social Security Administration (SSA) estimates that the Social Security program’s assets will gradually decline until they are exhausted in 2033 due the heavy influx of baby boomers entering the retirement benefits system.
A new study by the Congressional Research Service (CRS) provides four options for closing the financing gap. Although these options differ slightly, they all reflect a raise in the wage base to $214,500, with varying tax rates. The four proposed rate options, combining the employer and employee portions of Social Security tax, are:
- 12.4% (i.e., the current rate);
- 11.4%; and
- the current 12.4% rate with a 2% payroll tax rate on earnings above the limit.
The upshot: An increase appears to be inevitable.