Should You Be Worried About Receiving Your Social Security Benefits?
If you stay current with the news periodically throughout the year, you will have undoubtedly seen one (or several) articles outlining the woes of the current Social Security system. I recently read a good article in the June AARP Bulletin (“Healthy Now, But Outlook is Risky”) and want to share some of the facts provided in that article:
- Without changes, the Social Security trust funds would begin to be depleted in 2035.
- What this means is that they are projecting that they would only be able to pay 80% of scheduled benefits after that date.
- The trustees reported that in 2020 the total cost of Social Security will begin to outspend its annual cash receipts, meaning the program will have to start tapping trust fund assets.
While the above all sounds terrifying, keep in mind the following:
- This is not the first time we have run into this situation, with the last time being under President Reagan I believe, and the administration made adjustments at that time to help fix the problem.
- You don’t want to be the party in power in 2035 when this issue is expected to rear its ugly head. In other words, if your party is in power and you are required to cut someone’s entitlement payments, good luck winning re-election.
- There are numerous ways to help fix the problem including:
- Increasing the Social Security wage base (currently at $132,900), or
- Increasing the current rate charged (currently at 6.2% for both employees and employers), or
- Increasing the Full Retirement Age (FRA) for younger generations, or
- Some combination of all three.
In my humble opinion, this situation will be remedied. That said, in looking at how our government has dealt with similar issues, it may not be until the 11th hour before they deal with it, but I am reasonably confident they will deal with it.
If you have any questions about how the Social Security system or how your benefits are factored into your retirement plans, please contact us as we are glad to help.