Regardless, if they raise the cap, they can easily stipulate that the payout limit does not go up. It would be their law after all.
In theory we made it we can break it....but not easily, the formula since 1977 for determining the cap and the maximum benefit is all derived from the same statistic, the average wage index, all the formulas (cap, benefit floor, bend points and max benefit) rest on that one stat and have for almost 30 years:
socialsecurity.gov
Average wage index
The average amount of total wages for each year after 1950, including wages in noncovered employment and wages in covered employment in excess of the OASDI contribution and benefit base. (See Title 20, Chapter III, section 404.211(c) of the Code of Federal Regulations for a more precise definition.) These average wage amounts are used to index the taxable earnings of most workers first becoming eligible for benefits in 1979 or later, and for automatic adjustments in the contribution and benefit base, bend points, earnings test exempt amounts, and other wage-indexed amounts. See table V.C1.
All the formulas would have to be adjusted.
Although part of the tax reductions in 2001 were offset by increasing the cap on the Medicare tax collected, the last dollar of income is now subject to the 2.9% Medicare portion (it used to have the same cap as SS) which essencially took back the reduction in marginal tax rates.
My statements from SS already say that if I don't work another day in my life, I will still get the maximum permitted by law, and I won't start collecting for 22 years.
Sorry to break this to you, your SS statement makes assumptions, one of which is that you will continue to work those 22 years before you retire and your income will keep pace with the previous years levels. The benefit estimate is simply a reflection of those assumptions.
Here is a calculator you can download to estimate your benefits and if you read the PDF with the instructions for using it you will see that the calculation is fairly complex bringing into account the first year of wages and the last as well as the level of wages.
socialsecurity.gov |
