• The 1992 Annual Report of the Social Security Board of Trustees has been released, and it contains both good and bad news. First, the good news. In releasing the report, Health and Human Services Secretary Louis Sullivan stated: “[C]urrent projections indicate continued substantial growth of the [social security] trust funds over the next several decades, helping to ensure that social security can meet its financial commitments in the next century when today’s younger workers become eligible for social security.” However, the report also contains some bad news—the medicare fund “is severely out of balance” and will be depleted by the year 2009 (under optimistic assumptions ) or 2000 (under pessimistic assumptions). The report notes that four workers currently support every medicare recipient, and that this ratio will decrease to two workers supporting every medicare recipient by the middle of the next century.
Several projections were contained in the report, including the following:
Projected maximum earnings subject to FICA and self-employment taxes (currently $55,500) are $57,600 for 1993; $60,000 for 1994; $62,700 for 1995; $65,700 for 1996; and $69,000 for 1997. These figures are released to assist taxpayers with financial planning and budgeting.
Maximum wages subject to the medicare portion of FICA taxes (currently $130,200) are expected to rise to $135,300 for 1993.
Inflation will boost social security benefits by an estimated 3% for 1992, 3.4% for 1993, 3.6% for 1994, and 4% for the remainder of the century.
The “annual earnings test (the amount social security recipients from 65 to 70 years of age can earn without any reduction in benefits) is expected to increase to $10,560 for 1993; $11,040 for 1994; $11,520 for 1995; and $12,000 for 1996. The annual earnings test for social security recipients from 62 to 65 years of age is expected to increase to $7,680 for 1993; $8,040 for 1994; $8,400 for 1995; and $8,760 for 1996.
Social security tax rates will remain at 15.3% for both FICA and self-employment purposes for now. Congress would have to approve any further increase in social security taxes, and there is no proposal pending. Further, this is an election year, making any tax hikes very unlikely.
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