You may have heard by now that Social Security is going broke. This system is large and complex, paying out $90 billion a month to more than 64 million retirees, people with disabilities and their family members. Social Security is supported by more than 90 percent of Americans and is essential to their financial health. But with a system so complex, it’s no surprise that there are concerns over its strength and longevity.
One of the most persistent - and worrisome - rumors is that Social Security is going broke. Let’s learn more about where these concerns are coming from and what we can expect from Social Security in the near future.
Why People Think Social Security is Going Broke
Every year, the Social Security Board of Trustees releases a report analyzing both short- and long-term outlooks for the program. The Trustees have long warned Americans that the program would eventually face a funding obligation shortfall. In the 2020 report, the Trustees projected that the program will use all of its $2.9 trillion in asset reserves by 2035.
Some of the reasons why Social Security is going broke are:
As diresome as this news may sound, you can relax. As long as Americans work and pay taxes, Social Security won’t run out of money. It’s a pay-as-you-go system with money coming in from multiple sources. However, we can expect some changes in the future in order to address the funding challenges Social Security faces.
How We Can Make Social Security More Secure
Social Security will likely be there when you need it, though it’s possible that the benefits will be less or that the full retirement age will be raised. But the good news is that the system is not going broke or becoming obsolete. It continues to collect tax revenue, and because of this, it will continue to provide benefits for Americans.
Here are some of the options we have to make Social Security more secure:
Retirement Planning in New Jersey
Social Security is meant to replace at least 60 percent of your monthly income but you still need to have savings in other areas. This is especially important knowing that Social Security may reduce payments one day. Protect your financial health by speaking with a retirement planner from Leonard Financial Solutions. We’ll assess your situation and determine the best ways to guarantee a healthy and financially secure future.
One of the most persistent - and worrisome - rumors is that Social Security is going broke. Let’s learn more about where these concerns are coming from and what we can expect from Social Security in the near future.
Why People Think Social Security is Going Broke
Every year, the Social Security Board of Trustees releases a report analyzing both short- and long-term outlooks for the program. The Trustees have long warned Americans that the program would eventually face a funding obligation shortfall. In the 2020 report, the Trustees projected that the program will use all of its $2.9 trillion in asset reserves by 2035.
Some of the reasons why Social Security is going broke are:
- Baby Boomers are retiring
- People are living longer
- Birth rates are plummeting
- Net legal immigration has decreased
- Income inequality is on the rise
As diresome as this news may sound, you can relax. As long as Americans work and pay taxes, Social Security won’t run out of money. It’s a pay-as-you-go system with money coming in from multiple sources. However, we can expect some changes in the future in order to address the funding challenges Social Security faces.
How We Can Make Social Security More Secure
Social Security will likely be there when you need it, though it’s possible that the benefits will be less or that the full retirement age will be raised. But the good news is that the system is not going broke or becoming obsolete. It continues to collect tax revenue, and because of this, it will continue to provide benefits for Americans.
Here are some of the options we have to make Social Security more secure:
- Raise the payroll tax rate
- Raise the full retirement age
- Lower monthly benefits
- Raise the ceiling on which Social Security taxes must be paid
- Change the way cost-of-living adjustments are calculated
- Invest Social Security trust funds in the stock market
Retirement Planning in New Jersey
Social Security is meant to replace at least 60 percent of your monthly income but you still need to have savings in other areas. This is especially important knowing that Social Security may reduce payments one day. Protect your financial health by speaking with a retirement planner from Leonard Financial Solutions. We’ll assess your situation and determine the best ways to guarantee a healthy and financially secure future.
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