General Discussion
In reply to the discussion: "I live on $710.00 a month, what exactly am I supposed to cut?" [View all]BlueCaliDem
(15,438 posts)of benefits, not the base benefits {earned benefits}. Nothing else changes except for the fact that we'll still have a Social Security worthy of that title post 2033. But if we do nothing, base benefits will be slashed by a projected 25% - which is what you apparently prefer. I don't. I don't want to look at a 25% cut in my hard-earned base benefits when I retire. This 25% calculation is according to the 2012 SSA Trustee's report analysis.
I repeat there are no cuts being proposed to social security's basic benefits.
Social Security benefits are currently calculated using a formula that takes into account your income and replaces a certain percentage of it. Here is exactly how that's done: by determining one's average monthly income - wage-inflation adjusted - in the thirty-five best earning years of one's life, and then applying a "bend point" formula to determine your base benefit (fashionably known as PIA or the "primary insurance amount" . If you retire in 2011 at your normal retirement age, for example, your basic benefit is determined using the following formula:
(a) 90 percent of the first $749 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $749 and through $4,517, plus
(c) 15 percent of his/her average indexed monthly earnings over $4,517.
These "bend points" are adjusted by a formula that has been set in law since 1979, and are based on wage-growth, and there is absolutely no changes to that formula in the current proposal. The changes in the Fiscal Commission plan actually increases the base benefits for the poorest workers who are also likely to have the least in savings or other retirement income.