The recent posturing on Capitol Hill by both sides of the political spectrum has sent fear through the homes of many Americans who are, or will be, dependent on Social Security and Medicare later in life.
There have been whispers of significant cuts to both of these programs in order to get Republicans to raise the debt ceiling, but as it turns out those cuts may be much less dramatic than was originally thought.
The items that are still under consideration include an extension of the Social Security payroll tax, and the use of a cost-of-living adjustment to Social Security income that would be based on a chained Consumer Price Index, according to CBS MoneyWatch. Changing to a CPI-based system may lead to lower COLA payments in the future.
Americans who were planning their retirement around finances they were expecting to receive from the federal government may want to consider investing in whole life insurance policies or annuities that may help ensure financial solvency during retirement years. Shifting COLA payments to a chained CPI may mean that higher tax brackets would be available at lower yearly income, cutting overall benefits, according to the Wall Street Journal.