ARBOR WEALTH: Unions, pensions & Social Security

Published: Thursday, February 20, 2014 at 03:50 PM.

Our population is aging, though not as fast as those of other developed nations. And, owing partly to our relatively friendly immigration policies, our population is not shrinking. As John Parker of The Economist writes, “… almost 20 countries have declining populations, including large ones such as Germany, Russia and Japan. By 2050, two dozen more will have joined them, including … China. Since most countries’ health and pension programs have assumed that each successive generation will be slightly larger than its predecessor, aging and shrinking implies substantial changes in the way social programs are run.”

Will changes in U.S. Social Security occur before, say, 2025? Probably.  With life expectancies growing, it is reasonable to assume that raising the minimum eligibility age (currently 62) will be one of the first systematic changes. Many see this as the most democratic potential change.

Currently, folks pay Social Security tax only on their first $117,000 of earnings. While this number rises slowly every year, a jump to a larger number like $150,000 would shore up some cracks in the coffers. But, this essentially represents another tax on America’s higher wage earners, a group already paying significant individual tax rates. This is truly a “tax by another name.”

Means testing?  Let’s don’t go there.

Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, (850-608-6121 —, a fee-only and fiduciary registered investment advisory firm located near Sandestin.


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