Business Law: Analysis of Social Security Changes and their Impact

This essay provides a comprehensive overview of social security, its core principles, and its significance in the context of business law. It delves into the recent changes in social security, specifically focusing on the increase in the full retirement age, the impact of this alteration on individuals born after 1954, and the implications for early retirement claims. The essay further examines the modifications to the taxable earnings cap and the earnings test, clarifying how these changes affect the benefits received by those who claim social security before reaching full retirement age. It also touches upon the concept of disability benefits, survivor benefits, and the eligibility criteria. The analysis includes references to the latest research and legal frameworks, offering a thorough understanding of the current state of social security and its impact on various stakeholders.

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The concept of social security refers to a situation where the system of the government
produces a monetary assistance to all the individuals who has a sufficient rate of income. It
has been defined and illustrated under Article 22 of the Universal Declaration of Human
Rights. It further states that there have been action programs set up by the organization, the
purpose of which was to promote the welfare of the population. Access to proper resources
such as for shelter and food will be provided for the well being and health of the population
especially the children, unemployed and sick people. Therefore, the process of providing
social security deals is usually known as social services. Further, social security also refers to
basic security, social insurance and services. Basic security is irrespective of the involvement
of particular insurance programs where the eligibility might be an issue. Social insurance on
the other hand, refers to a situation where the individuals obtain benefits that is related to the
contributions of the insurance programs. The social insurances generally involve the
provision of pensions, disability insurance and the insurance of the employment. There are
financial support, retirement, health and safety at workplace in different countries. Social
security also refers to the set of benefits that are available from the state, households and the
combinations of the agencies (Rosenheck et al. 2017). The specific changes that took place
over the last two years deals with the concept of raising of the retirement age, social security
cap, longevity index, increase in the cost of living for the retirees.
Two recent changes in the last two years of social security
Various changes in the social security have taken place in the last two years.
Increase in full retirement age is the first basic alteration that has taken place in the recent
years. This alteration states that the normal retirement age for the benefit of social security
has been 66 years of age till date. The present change states that the age limit has risen up to
67 for those Americans who have born after the year of 1954 (Gelber, Isen and Song 2016).
This is significant to say that the alteration or change had affected the individuals who have

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reached the age of eligibility for the benefits of social security. In particular those Americans
who will be attaining the age of 62 in the year of 2018 will receive a full retirement at the age
of 66 and four months. On the contrary, individuals who will obtain the age of 63 in the year
mentioned above will get the benefit of full retirement at the age of 66 years and two months.
Such a situation will have a dramatic reduction among the Americans. For instance, if a
worker who has a full retirement at the age of 66 claims the same at the age of 62 then those
individuals will be facing a reduction of 25%. However, if any employee with a full
retirement age is said to be 66 years and four months then the rate of reduction percentage
will be 25.8%. The benefit amount therefore exceeds and rises with the higher level of
income and a later age of retirement. Generally the retirees decide to spend their years of
retirement in some other country (Couch, Tamborini and Reznik 2015). There are a few
specific countries that have the sanctions with the help of which the administration of social
security will not dispatch payments. Every country has a variety of restrictions and
limitations on receiving the benefits of the government. Plenty of the developed countries
face problems regarding the paying systems. The major concern is that the population is
increasing day by day and hence many individuals are retiring all across the world and
receiving benefits. The concept of incentives make the process of retirement get permitted at
a very early age. In Taiwan, it was observed that the benefits will rise if an employee stays in
the labor force till the age of 65. On the other hand, if the worker continues to pay into the
system but the benefits provided will not rise. OECD will take the countries into account the
benefits a person will be attaining for a lifetime if he works for an extra year. When it comes
to United States, the process of retirement is different (Brown, Kapteyn and Mitchell 2016).
The social security payments are considered to be unfair (Rejda 2015). It has been observed
that those individuals who have retired at a very early age of eligibility receive the exact
amount of benefits during their lifetime since they had retired at the common age of

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retirement. Some of the social security systems were considered to be new and others were
newly established. However, all will be embedded in the cultural expectations for the ones
who care for the elders. As far as the extension of full retirement age is concerned, the
benefits of those claiming early will be reduced a little more (Saunders 2017). Hence, this
method will be considered as the plan of the retirement.
In this situation of higher earnings limits when the social security is claimed before
the full retirement age, an individual can work and obtain the income till a specific threshold
without reducing the benefits received. For the present situation, there have been earnings of
the threshold where the value is $17,040. When the income incurred is above this amount
then the benefits of the retirement will be decreased by $1 for the every extra $2 every
individual will earn. However, the rules will be unlike for the particular year when that
person will reach the year of full retirement age. If the full retirement age is attained at any
time in the present year of 2018 then the limit of the earnings will be $3,780 per month
including all the months that has been remained below the age of full retirement. The income
earned that is above the threshold, which is decreased by $1 for every extra $3 that is earned,
will be getting the benefit (Taulbut et al. 2016). Therefore, for the individuals who have
obtained the benefits of social security disability then the earnings of the monthly threshold.
These are earned when the benefits are not affected and what increases to $1,970 especially
for the ones who are not disabled and blind. On the other hand, $1,180 is the amount that will
be received by those individuals who are non-blind disabled. There was another noticeable
change that has taken place is the earnings test limits have gone up. Secondly, there is a
slightly higher taxable earning cap. This has been increasing over the years as well resulting
in the suitable changes. Every year there is a maximum amount of the wage income that is
related to the social security tax. As per the data, for the previous year the maximum rate was
set at $127,200. By this it was meant that the amount of the earned income that was above

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this parameter was not included in the column of paying tax for the social security. In the
present year, it has been observed and noticed that the maximum taxable earnings amount has
risen from $1,500 to $128,700. This implies to a situation where the individuals who have a
high income will have to pay more in the tax of social security as compared to what they paid
the previous year. Therefore, the earners who have a high rate of income receive a slight
break. It can be further stated that persons having a high rate of income will have the benefit
in such a situation (Barrientos and Hulme 2016).
If the social security is claimed before attaining the age of full retirement and who are
still working, the amount of money earned will therefore decrease the benefits of social
security (Kitao 2014). It is known as the earnings test of the social security and therefore
there are two different kinds of test that varies on the age of the individuals. For instance, if
the age of full retirement is reached after the present year then $17,040 in earnings will not be
included from the consideration. Therefore, the benefits of the retirement will be reduced by
$1. In the second instance, if an individual reaches the age of full retirement during the
present year then the annualized income of $3,780 per month will not be included. However,
the benefits of the retirement can be decreased by $1 for every $3 in the excess earnings.
Thus, for the test to take place, the months before reaching the age of full retirement will be
taken into consideration and not the entire year. Thus, if the benefits are on hold due to the
earnings test then it can permanently increase the benefits once the age of full retirement is
considered and followed. It has been observed that before an individual has qualified to attain
the benefits of social security in the United States, he must have earned a particular amount
of credits. Every tax payer of US should have the amount of credits. Individuals who were
not born in United States should have been working in the United States for a period of 10
years. The administration of social security takes the amount of the earnings into
consideration and the age of retirement of the person. However, the Americans are beyond

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the process of the savings of retirement (Grossmann and Varnum 2015). The secrets of social
security make sure that it boosts up or increases the income of the retirees. Social security
however pays disability benefits to more than 10 million people and there are approximately
the maximum amount of income that people can still earn while gathering the benefits of
disability. The monthly thresholds have risen over the years (Lindner 2016). The cost of
living adjustment is also taken care by the administration of social security for the
beneficiaries. The amount keeps fluctuating depending on the higher inflation especially the
rise in the CPI. Therefore, plenty of beneficiaries have faced the increase or rise in their
medical premiums. It should produce and provide a higher check for the beneficiaries.
For the general and basic categories of the social security there are benefits that are
paid based on the records of the earning. Survivor benefits refers to that situation when a
spouse of a worker who is qualified for the retirement of social security or the minors
associated will be entitled to the benefits based on the earnings record of the deceased spouse.
If he retirement age is not met then the work requirements are considered to be disabled
under the Social security. One can receive the benefits that are generally considered to be
equal as per the benefits of the retirement (Norris 2016). Under current law, same-sex
spouses are eligible for Social Security benefits if the state in which they live recognizes their
marriage as valid. Currently, this means any of the states that have legalized same-sex
marriage plus New Mexico, which will recognize legitimate same-sex marriages from other
states.

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Concepts, policies and politics. Springer.
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Couch, K.A., Tamborini, C.R. and Reznik, G.L., 2015. The Long-Term Health Implications
of Marital Disruption: Divorce, Work Limits, and Social Security Disability Benefits Among
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Dynamics, 17(4), pp.756-779.

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