Social Security - A Parachute Made of Sand

Two major topics in US politics - Social Security and health care - seem to have merged this week. According to the media SS recipients will not see COLA increases for the next two years. In fact those 32 million who participate in the Medicare prescription drug program will see a slight drop in SS benefits.

Boy, that should teach Seniors to speak out about elements of health care reform in those Town Hall meetings. Actually I'm positive that this COLA freeze had been in the works prior to the Town Hall meetings. The economic downturn has put additional screws into the Social Security Program and something had to give.

The average SS recipient receives $1,153 a month in benefits (I receive about half that amount). Current workers pay SS taxes only on the first $106,800 of their annual income. This limit rises as the average national income levels increase. What I'd like to know is who the hell thought up that one up?

The average Joe maxes out at $42,000 in annual income and pays FICA taxes all that time, but those who earn more than $106,800 see this tax stop when that limit is reached. Young professionals earning $100,000+ salaries will see this tax stop toward the end of each year and end of year bonuses will be FICA free. Those huge bonuses that were given to executives who helped to get us into this financial mess are also FICA free.

When time for retirement rolls around and SS benefits are determined based on the last three years of employment, I'm sure that amount will only be a small portion of some retirement packages (maximum monthly SS benefit is $2323). For some Americans it will be all they have to live on. Not everyone gets a golden parachute.

This seems like a pretty good time to uncap the Social Security tax limit. I'm less favorable about raising retirement age to 70 to receive full benefits. I could see giving someone a bonus for working past 66 years of age or capping FICA once an employee has reached a combination of age and years of employment. But a cap on Social Security tax for those who can more easily afford to pay it seems irresponsible in our present financial situation.