Nine out of 10 Iowans who plan to attend the state's presidential caucuses on Feb. 1 are concerned about the future of Social Security. An AARP survey released Jan. 21 showed that 94% of Iowa voters believe the next president must make Social Security more financially sound.
In July last year, AARP warned that if changes are not made soon, individual Social Security Income (SSI) benefits could be cut by up to $10,000 a year by 2033.
Already retirees' SSI benefits are suffering from low oil prices. The cost-of-living adjustment (COLA) wasn't raised for fiscal year 2016 — as it likewise wasn't in 2010 and 2011 — because of plummeting oil prices and a lack of inflation. This means that when prices do increase, retirees' benefits won't go up in lockstep – thus resulting in increasingly stressed bank accounts and tighter wallets.
Each of the 2016 presidential candidates has touched on how they'll make changes to fix Social Security. But relaying those policies to Americans in a comprehensive way has been a struggle. Among Republican caucus voters surveyed by AARP, 41% would like to know more about Sen. Ted Cruz's (R-TX) plans.
That's why Money Morning has taken an in-depth look at his proposed Social Security policy.
Here's what we found…
Ted Cruz's Social Security Plan: Raise the National Retirement Age
"If I'm elected in November 2016, I hope to lead the effort to…preserve and strengthen Social Security and Medicare for decades going forward," Sen. Cruz told FOX News' Neil Cavuto on June 5, 2015.
Cruz went on explain that he would like to see SSI reform to preserve entitlements, as well as a gradual increase in retirement age to 70.
You see, currently participants in SSI benefits can start collecting at age 62, but they get a 6% boost to their monthly benefits if they wait until age 67 to collect.
After 67, that bonus increases to 8% a year for each year until age 70.
In total, that percent increase in monthly benefits between retiring at 62 and retiring at 70 amounts to a 44% difference.
Sen. Cruz's proposal would therefore reduce a retiree's full lifetime Social Security benefits.
But at the same time, it would provide a great boon to seniors…
It would shrink the SSI deficit.
"Increasing the retirement age from 67 to 68 would erase 12% of the deficit that Social Security is expected to face 75 years from now," reported The Atlantic on Sept. 4, 2015.
That's just a one-year addition to retirement age, however. According to a report posted on CBS Money Watch on March 12, 2015, increasing the normal retirement age (NRA) by three months each year until it reaches age 70 — Cruz's plan — would reduce the deficit 48% by 2032.
The current SSI deficit averaged, and will continue to average, $77 billion between 2014 and 2018, stated Money Watch. After this point, the deficit is expected to increase dramatically as the number of beneficiaries continues to grow faster than the number of covered workers.
There are many intricacies regarding Social Security that Americans just don't know or understand – and Congress has long kept the SSI code intentionally opaque to keep it that way.
Several filing tactics that are available right now take advantage of the Social Security code.
And if you've been paying into SSI your entire life, you deserve every penny you can possibly take. Here's more on how to take advantage of lesser-known, lucrative Social Security filing tactics…
- The Atlantic: Raising the Retirement Age: A Sneaky Way to Reduce Social Security Benefits
- FOX News: Sen. Ted Cruz: Republican Voters Looking for Consistent Conservatives