Social Security is a major source of financial well-being in retirement. Nearly 49 million retired workers received benefits in January, and about half of people aged 65 and older get at least 50% of their family income from Social Security. Given its importance, retired workers should try to stay informed on the program, and there have been several big changes already this year.

Here are the most important details.

Good news: The largest cost-of-living adjustment since 1982

Inflation scorched the U.S. economy last year, driving up the cost of gasoline, groceries, and other necessities at the fastest pace in four decades. Meanwhile, Medicare Part B premiums soared 14.5% in 2022, marking one of the largest price hikes in history. In total, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) -- the metric used by the Social Security Administration to measure inflation -- increased 8.5% last year.

That inflationary pressure was particularly problematic for retired workers because Social Security benefits only received a 5.9% cost-of-living adjustment (COLA) in 2022. For context, COLAs are intended to protect the buying power of benefits, and they have done a decent job over time, but the 2022 COLA failed to fully offset the impact of rising prices. In other words, benefits lost buying power last year.

Fortunately, Social Security benefits got a huge 8.7% COLA in 2023, marking the largest raise for retired workers since 1982. Better yet, inflation has slowly decelerated over the last six months, and the CPI-W increased 6.3% in January 2023, well below the 8.7% COLA applied to benefits this year. That means Social Security benefits are on pace to regain some (or more) of the buying power lost in 2022.

Bad news: More retired workers will pay federal income tax on Social Security benefits

Unfortunately, while benefits are adjusted for inflation each year, the income thresholds that dictate the federal taxation of benefits have never been adjusted. That has created a problem. More retired workers owe taxes on Social Security income each year simply because COLAs are driving up benefits.

For context, less than 10% of recipients paid federal income tax on benefits when the law took effect in 1984, but more than half pay tax on benefits today. And that figure will continue to climb this year due to the unusually large COLA in 2023.

The table below details the relevant tax rates for Social Security benefits based on combined income, which is defined as modified adjust gross income plus half of Social Security benefits.

Data source: Social Security Administration.

Individuals who fall into the income thresholds detailed above have two options: They can make estimated tax payments to the Internal Revenue Service each quarter, or they can choose to have federal taxes withheld from benefits by filing a Form W-4V with their local Social Security office.

Bad news: The Social Security trust fund may be depleted sooner than expected

Social Security is facing a $20 trillion funding shortfall over the next 75 years due to cost pressures created by the aging population. Last year, the board of trustees estimated that the Social Security trust fund -- the source of benefits paid to all beneficiaries -- will likely be depleted by 2035. However, a 2023 COLA ranging from 3.9% to 5.1% was baked into that estimate -- the genuine COLA came in much higher at 8.7%. That could accelerate the depletion of the Social Security trust fund.

That said, government officials in Washington are aware of the problem, and they have proposed a broad continuum of potential solutions. But even if the trust fund does run dry in 2035, income from payroll taxes would still cover 80% of scheduled benefits. In other words, the Social Security program is not going to disappear.

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The U.S. government is apparently in financial trouble, according to a report released by the Congressional Budget Office.

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© BRENDAN MCDERMID (Reuters) Unemployment Insurance provides workers that lose their jobs financial support for a time while they look for a new position but the amount paid varies.

While unemployment has hit an historic low nationwide in January, there have been a series of high-profile layoffs, especially in the tech industry. For those workers who lose their job through no fault of their own they may be able to receive unemployment compensation. Unemployment Insurance programs provide financial support to workers for a period of time while they find a new position.

The amount that those who find that they are out of work and eligible to collect unemployment benefits varies greatly from state to state. According to Savings to Invest, a personal finance blog, the stingiest state is Mississippi paying out at most $235 per week, but at least the state pays up to 26 weeks of benefits. Alabama, Louisiana, Tennessee and Florida all pay at most $275 per week, but Florida will only cover 12 weeks currently.

At the other end of the of the spectrum is Massachusetts which boosts household incomes with up to $1,051 per week plus $25 per dependent. Additionally, recipients may qualify for up to 30 weeks of benefits. Following the Massachusetts for highest benefits paid out are Washington, Minnesota, New Jersey and Hawaii which all pay 26 weeks of benefits ranging from $999 to $765 per week.

How does unemployment insurance work?

Unemployment insurance is financed through both state and federal unemployment taxes on employers. The state payroll taxes for unemployment insurance vary by state but the federal tax is uniform. As of 2021, the Federal Unemployment Tax Act (FUTA) tax rate is 6 percent of the first $7,000 paid to each employee annually.

The federal government ensures that all states provide basic protections for eligible workers but imposes minimal requirements. States can choose the eligibility criteria, such as the type and duration of prior employment.

The rate that benefits replace wages for the unemployed vary widely from state to state. So too does the number of weeks of unemployment compensation but most states offer 26 weeks of regular unemployment compensation.

Who is eligible for unemployment compensation?

In order for a worker to claim unemployment compensation he or she must lose his or her job through no fault of their own. If a worker leaves their job voluntarily they most likely will not qualify for unemployment insurance, there are exceptions. Additionally, those who are self-employed such as contractors or gig workers as well as undocumented workers generally cannot claim jobless aid.

The worker must also be actively looking for gainful employment, the “active work search requirement” can be fulfilled in a variety of ways and varies from state to state. It generally includes applying for a job in person, by mail or online through a employment service or state job listings board. Another way is applying for work through a temporary staffing agency or registering for work or reemployment services with the state career center. The requirement could also be fulfilled by interviewing for a job, attending a job fair or other event that would help a worker find a new job.

How are unemployment benefits paid?

Many states require that a worker go through a “waiting week” in which no benefits are paid. Only in the following week can a laid off worker file their initial claim. Even then, some states will not make the first payment until three weeks after a worker starts claiming weekly benefits, the federal standard.

Those collecting jobless aid can receive their unemployment payments via paper check, direct deposit to an account or pre-paid debit card, or on a state issued pre-paid debit card. How states send the payments again varies from state to state but states cannot require that those claiming benefits use a state issued pre-paid debit card according to Consumer Financial Protection Bureau.

Claimants should be aware that unemployment benefits are taxed by the federal government and some state governments as well must be declared on tax returns.

Claimants may have to pay back any over payments

In the event that a worker claiming unemployment benefits receives excess amounts they most likely will be asked to repay the overpaid amount back to the state. Overpayments can occur because of unintentional filing errors by the filer or the agencies with which they are filing. The claimant can appeal collection to avoid having to return the money but usually has to do so within a set time limit set by the state. Claimants should check with their state’s unemployment agency for specific details.

If the overpayments were due to intentional erroneous filing by the claimant that constitutes fraud and can have legal implications and result in criminal charges.

SACRAMENTO – Our nation’s judicial system has its share of problems and injustices, but an independent judiciary remains one of the crowning achievements of our relatively free society. Authoritarian countries have judicial systems, but citizens in those benighted places lack due process because they are playing a game with house rules. And the house always wins.

Yet the federal government and states operate a series of quasi-judicial systems that function like a rigged card game. The stakes are high, but the player doesn’t have a chance. I’m referring to the way that powerful state and federal regulatory agencies enforce Byzantine codes through an administrative process that has many trappings of the traditional court system.

Let’s say the a state or federal labor agency accuses your business of shortchanging workers, or an environmental agency accuses you of despoiling a wetland as part of a construction project. Agency officials make mistakes or misinterpret the law, so you attempt to have your day in “court” to protest a fine or regulatory enforcement action.

Your case will come before an administrative law judge, but these aren’t the same as court judges. They sometimes are employees of the agency. Other times, administrative judges are dispatched from a clearinghouse agency that claims to provide neutral decisions. They operate through a looser set of rules than the judiciary and might be expected to share certain bureaucratic pre-dispositions.

Related: The crushing cost of regulation

It’s no surprise how often administrative opinions reflect the outlook of the agency, although on occasion these arbiters defy the odds. Even when they do, the agency itself can often overrule the finding of the administrative law judge. How’s that for a stacked deck?

A case before the Arizona Supreme Court touches on that due-process issue. As the Goldwater Institute’s Timothy Sandefur explains, the Arizona Clean Elections Commission accused an educational foundation of running political ads. The ALJ sided with the foundation in a jurisdictional matter – and then the commission simply overrode that decision.

“If John Does is charged with, say, running a business without a required license, the agency could level an accusation, and allow him to appear at a hearing to argue why the agency is wrong,” Sandefur wrote. “But even if he persuades the judge to rule in his favor, the agency can simply set aside that ruling and declare John guilty notwithstanding.”

As Sandefur added, bureaucracies “hold immense power to control how businesses operate, how private property is used, and countless other aspects of private life,” yet the law often allows them “to override the basic principles of due process.”

This entire regulatory appeals process provides a fig leaf of independence, but that patina of judicial oversight is arguably worse than rule by edict. In the latter case, we at least know what’s going on. With a process where the agency almost always wins, the government can claim it thoroughly vetted the defendant’s allegations through a fair process.

Defendants in administrative proceedings have the right to their day in the genuine court system, but defendants generally can’t get there until they’ve exhausted their administrative remedies, which can sometimes take years.

When defendants finally get to court, judges often defer to the expertise of the administrative law judge and refuse to question the facts those “experts” have established. In some cases, judges won’t allow evidence that was never presented as part of the agency’s proceeding. The current system not only delays the application of justice, but it tips the scales throughout the process.

When an individual is fighting the government – either the IRS or any of the hundreds of alphabet-soup agencies – most rules are written in government’s favor. These include sovereign immunity and qualified immunity to protect the government and its officials from being responsible for unconstitutional actions, as well as evidentiary rules and timetables that typically benefit the government.

How did we get here? These regulatory appeal processes evolved as a reasonable means to provide recourse when citizens petitioned the government for, say, a disability payment or some other financial benefit. As regulatory agencies’ power expanded in the 1970s, these quasi-legal systems were increasingly used to resolve disputes whereby the government accused citizens of violations.

More fundamentally, this system is an outgrowth of the progressive tendency to elevate the rule by experts over the protection of individual rights. There’s no obvious solution, but Americans ought to understand that the growth in government regulatory bodies ultimately undermines our rights. Our legal system is still praiseworthy, but it’s more difficult than ever to get your day in court.

Steven Greenhut is Western region director for the R Street Institute and a member of the Southern California News Group editorial board. Write to him at sgreenhut@rstreet.org.

Feb 16 (Reuters) - Low-income Americans will soon receive less in food assistance or completely lose their eligibility for the benefits, as the federal government ends policies adopted at the beginning of the COVID-19 pandemic that kept millions from going hungry at a time of lockdowns and rising unemployment.

Anti-hunger advocates warned that the looming drop in aid could undo progress toward a Biden administration goal to end U.S. hunger by 2030. The Republican-controlled U.S. House of Representatives may also pursue further cuts to food assistance to shrink the U.S. deficit.

"It’s going to put millions of households at risk of hunger," said Eric Mitchell, president of the Alliance to End Hunger.

The changes mean cuts of about $82 a month beginning in March for recipients of Supplemental Nutrition Assistance Program (SNAP) benefits, said Ellen Vollinger of the Food Research & Action Center, an anti-hunger group. The average SNAP benefit will be about $157 after the reduction.

Since Congress passed the Families First Coronavirus Response Act in March 2020, states have been able to allocate the maximum allowable benefits to SNAP recipients, instead of applying deductions tied to income and other factors.

Initially, those "emergency allotments" were linked to the pandemic public health emergency. But in December's spending bill fight, Congress negotiated a compromise to end them in February in exchange for a new summer food program for children.

President Joe Biden's administration has also said it will lift the coronavirus public health emergency in May. This will end other changes that expanded access to SNAP, like a suspension of the program's three-month time limit for adults without children and exemptions for some college students.

In recent months, the additional benefits tied to the pandemic response have come to about $3 billion a month, according to the Center on Budget and Policy Priorities (CBPP).

Those higher benefits kept the percentage of Americans experiencing food insecurity steady at 10% through 2021, even as the first two years of the pandemic drove up unemployment, said Dottie Rosenbaum, senior fellow and director of federal SNAP policy at CBPP.

Meanwhile, food insufficiency - a more severe form of food insecurity wherein households sometimes or often do not have enough to eat - dropped by about 9%, according to a study by Northwestern University's Institute for Policy Research.

A separate study from the Urban Institute said the benefits kept 4.2 million people out of poverty. Anti-hunger advocates worry the looming reduction in aid could reverse those gains.

In states where expanded benefits have already ended, 29% of SNAP recipients visited food pantries in December, compared to 22% in states that still had the benefits, according to data collected by Propel, a technology company that makes financial products for low-income people.

Debate over U.S. spending on food assistance is likely to heat up in the coming months as lawmakers negotiate a new farm bill, a legislative package passed every five years that funds nutrition, commodity, and conservation programs.

More than 76% of the current farm bill's $428 billion price tag went to food assistance programs that serve 41 million people annually. The bill expires on Sept. 30.

Democrats generally support expanding benefits, while Republicans typically oppose expansion.

"The SNAP benefit was already way too low, even before the pandemic," Rep. Jim McGovern of Massachusetts, a Democrat on the House Agriculture Committee, told Reuters in an email.

“We need to seriously boost benefit levels to reflect the reality of food costs today," he said.

Food prices are up 10% since last year, according to the Bureau of Labor Statistics.

House Republicans have indicated they might review and tighten SNAP work requirements as part of farm bill negotiations.

The House Budget Committee has also floated cuts to SNAP as a means of reducing spending in the ongoing debt limit fight.

Reporting by Leah Douglas; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

By way of a few paragraphs inserted into the recently enacted 4,000-page 2023 National Defense Authorization Act, Congress mandated that state and local governments prepare their annual financial statements in a standardized format that is electronically searchable. The provision effectively drags state and local governments kicking and screaming into the 20th century, if not the 21st.

As worthy an accomplishment as this appears to be, it was resisted mightily by the state and local government financial community. Most prominently, they argue, the measure can potentially result in a major transfer of accounting and reporting regulatory authority from states to the federal government, thereby undercutting what many consider a fundamental principle of federalism. Moreover, state and local officials see it as one more costly unfunded mandate imposed upon their governments.   

The opposition by state and local governments is understandable. But they have no one to blame but themselves. To this day they are wedded to a technological past. In a perverted way, they may be getting their just desserts. The act requires them to do little more than what they should have done years ago on their own for the benefit of their investors and other stakeholders.  

Implicit in the act is that governments will have to prepare their financial statements using XBRL (eXtensible Business Reporting Language) or some comparable reporting framework. This is the format that the Securities and Exchange Commission, which would be charged with implementing the new provision, currently demands corporations use in their financial filings. XBRL requires all entities to classify each of the elements of their financial statements (e.g., assets, liability, revenues and expenses) by identical rules and in machine readable form.    

Developing an XBRL or similar taxonomy inevitably involves establishing accounting standards beyond merely assigning accounts to specific boxes in a spreadsheet. Currently, accounting standards are developed by the Governmental Accounting Standards Board (GASB), a nongovernment entity. Although its pronouncements are recognized as “generally accepted accounting principles” by the accounting profession as well as state governments themselves, the states nevertheless retain ultimate authority over the form and content of financial statements.   

While nothing in the act explicitly transfers standard-setting authority from the GASB to the SEC, when a camel gets its nose in a tent, its tail cannot be far behind. In other words, the act may be a sign of greater SEC—and thus congressional—involvement in financial reporting matters previously left to GASB and individual states.   

Although XBRL reporting is a necessary step forward, it is nothing but a baby step. Embarrassingly, state and local governments are still committed to paper annual financial reports. Virtually all governments large enough to issue public debt post their annual financial reports as PDF files on their websites. But these files are, in essence, nothing more than photos of their paper reports, which for even just mid-sized governments can run in excess of 250 pages. They take virtually no advantage of computer capabilities that would make their annual reports more user-friendly and ultimately useful to governments various stakeholders.  

Genuine electronic reports, as opposed to PDF files, can provide detailed information for those who need it (e.g., incorporating electronic links to specific sections facilitating data “drill-downs”) without overwhelming other users with excessive amounts of information. This would Boost the efficiency of the municipal securities market offering benefits to both governments that sell debt and the investors who buy it. This isn’t rocket science. In fact, it is not even computer science. It’s computer programming 101.   

While not addressed by the act, an even greater challenge for investors and other financial report users than the difficulty of navigating through paper-like reports is the tortoise-like speed at which state and local governments issue their financial statements. According to Merritt Research Services, the median time between the end of a government’s fiscal year and the date that its auditors sign off on the financial statements is 166 days. This contrasts with deadlines of 60 to 90 days that the SEC imposes upon businesses to file their annual reports. Since unfunded pension fund liabilities are often a government’s largest liability, and are directly dependent upon financial market valuations, this six-month delay effectively renders the financial statements useless for anyone charged with assessing the government’s fiscal sustainability.   

The costs of the improved technology required to issue financial statements that are both timelier and more informative cannot be minimized. Neither, however, can the analytical costs inherent in the status quo. These costs are currently borne by bond underwriters, rating services and individual investors. Ultimately, however, they are passed back to taxpayers in the form of higher borrowing costs paid by state and local governments as a result of unnecessary levels of financial information uncertainty.  

It is to be hoped that the measure just enacted will be a lesson learned by state and local governments. If they fail to do voluntarily what needs to be done for the investor community and their constituents, the federal government will be more than happy to do it for them.

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SINGAPORE – A calculator has been launched for Singaporeans to find out what among the Budget 2023 benefits they are eligible for and how much.

The "Support For You" calculator was mentioned by Finance Minister Lawrence Wong in a Facebook post on Friday (17 February).

"There were many support measures for Singaporeans announced in #SGBudget2023. It may not be so easy to keep track of all the schemes," Wong, who is also Deputy Prime Minister, said. "So our teams from GovTech (Government Technology Agency of Singapore) and Ministry of Finance (Singapore) have come out with a ‘Support For You’ calculator, which can help you estimate the benefits you and your household members can receive under our various packages and schemes."

A slew of financial help and enhanced benefits were announced by Wong during his Budget speech on Tuesday. These include a one-time "cost-of-living special payment", another S$300 in Community Development Council (CDC) vouchers, an additional Housing and Development Board (HDB) BTO ballot and enhanced grants for first-time buyers, and more money and paternity leave for couples wanting children.

Wong said that Singaporeans will "have to brace ourselves for a period of relatively higher inflation, both globally and also in Singapore".

"We cannot say how long this will last, but we expect Singapore's headline inflation to remain high, at least for the first half of this year," he noted. "The government will therefore do more to help Singaporeans through this difficult period."

Here are some things to note if you're using the calculator:

• The schemes listed are applicable only to Singaporeans.

• The calculator will require information about your assessable income and annual value of your home.

• You may include Singaporean family members residing together with you in the same address. This is to obtain an overview of the individual and household benefits that you may receive.

• The total benefits shown are estimates based on your inputs.

• Projections for payouts in the future are based on the assumption that the information you provided remains unchanged.

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