As some changes come to social security rules in America next year, the rule which makes taxes to be applicable to benefits will remain the same, putting senior citizens at risk of losing a large part of the benefits they need to survive.
The expected modification to the rules on social security includes cost-of-living adjustment (COLA), a higher wage cap for Social Security tax purposes, and a higher earnings-test limit for those who receive benefits while they work.
Normally, senior citizens who depend only on Social Security do not need to worry about their benefits being taxed, but those who have side income lose some of their benefits to taxes.
Whether the benefits of seniors get taxed is dependent on their provisional income, which is calculated by adding their non-Social Security income to half of their annual benefits.
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Despite being aware of the impact of rising living costs on retirees, the Social Security Administration not much has been done to address the problem by adjusting the rules that have seen the income from social security for senior citizens taxed.
But there are ways to limit the likelihood of social security benefits taxed. It is to save for retirement in a ROTH IRA. Withdrawals from ROTH IRA are not taxable and cannot be labeled as provisional income.
