Social Security relies on payroll taxes for the money it pays out in benefits. But some lawmakers want to pay more in Social Security benefits, and they're looking at eliminating the current $117,000 wage limit on Social Security taxes in order to boost revenue for the program. That has led to controversy between proponents and opponents of the measure.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at both sides of the Social Security wage cap controversy. On one hand, taking away the wage cap makes Social Security taxes less regressive, requiring high-income earners to pay the same percentage of their total income as everyone else. But currently, those who earn more than the wage cap also don't get additional benefits, with the benefit calculation also maxing out at the wage-cap limit. Dan concludes that the issue will continue to be contentious, but it could have ramifications not just for high-income earners but for millions of Social Security recipients as well.
How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.
Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!
Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.