Yesterday, right before I gave a talk on Social Security to a group of investors, I glanced at the headline on CNN Money which read, “Social Security trust fund projected to run dry by 2034.”
We all know it’s an election year and that the news media is fond of hyperbole in an attempt to catch viewer’s attention, but could this be true? Upon further reading the article states, “That doesn’t mean retirees will get nothing by 2034. It means that at that point the program will only have enough revenue coming in to pay 79% of promised benefits.” Okay, now that makes sense. In fact, the percentage has actually improved over the last few years from the previously reported 75% of benefits in 2034.
The reduction will only come about if Congress does nothing, which is not an unrealistic fear given its recent track record. However, with something as important as Social Security, Congress will act to fix the issue. After all, those taking or close to taking Social Security are the pool of consistent voters that politicians do not want to disappoint.
What are some of the steps that will fix the problem?
- The retirement age can be increased to 68.
- The cap on taxable Social Security income can be raised from the current $118,500.
- The percentage paid into to Social Security as a payroll tax can be increased from the current 12.4%.
- Future benefits could be cut or a needs-based test implemented.
One way or another, Social Security has hardly run dry nor will it in the coming decades. So beware of misleading headlines designed to panic and confuse. If you have questions about Social Security and how it can integrate with your overall retirement income strategy, give us a call at 844-507-0961.
To read the complete CNN article click here.