Retirement planning can feel like a cocktail of facts, guesswork and hope. Sometimes it feels like a second or third cocktail, making life a bit wobbly. But one fact is often overlooked and mostly unavoidable. Your Social Security income may be taxable income. Today, people who thought the taxation of Social Security only affected the rich are discovering that the tax lands squarely on upper-middle incomes.

How can that be? Easy. The tax is built so you pay a higher proportion of each additional dollar you receive beyond your Social Security benefits. This is a heavy burden on retirement funds that are taxed upon withdrawal, such as IRA accounts, 401(k) accounts and 403(b) accounts. In order to buy anything you need to withdraw more to cover the tax. In the end, you run through your retirement accounts faster. It wasn’t supposed to be that way.

If we think of Social Security as the social program it is rather than a pension plan, taxing benefits makes little sense. Designed to provide a basic income for everyone, it defeats the purpose for the Treasury to then take that money back. It’s simply a slick transfer of funds, on paper, from the Social Security trust fund to the general operating funds of the federal government. In reality, growing portions of the benefits are raised by new Treasury borrowings each year--- but that’s another story.

Social Security is the safety net for many Americans who won’t earn enough for it to be taxed. But it’s not just the wealthy who pay this tax. Most are planted firmly in the middle class. They’re not spending Social Security benefits on luxury resort vacations, mega-yachts or wine cellars. They aren’t even tucking it under their mattresses. They are spending it--- paying utility bills, buying food, and trying to cover the cost of prescription medications that are now priced to make hedge fund managers happy, not patients.

Maybe there is another way to look at this animal. Rather than taxing Social Security benefits, is it possible to increase the benefits? Smart people think so. Remember, the number of workers with pension income is decreasing year by year. So we’re looking at a future with an increasing number of people whose income will come from Social Security or their savings. Now recall that the deliberate policy of our government is called ZIRP for “zero interest rate policy.”

Higher benefits would increase the standard of living for seniors and put more money into the economy. It’s a win for us all.