If Congress fails to act, benefits will be slashed in 12 years
If you are in your 40s or 50s and looking forward to retiring in a few years and drawing Social Security, there’s something you should know. Unless Congress acts to add to the Social Security trust fund, benefits will be slashed by 25% or more as early as 2035.
Estimates vary but at its current pace, the Social Security trust fund will run short of money at some point in the early 2030s. According to the Social Security Administration (SSA), the Social Security Board of Trustees projects program costs to rise by 2035 to the point that taxes will be enough to pay for only 75% of projected benefits.
If Congress doesn’t address the issue before then – which would almost certainly require some type of tax increase – benefits for everyone receiving Social Security would be cut, probably by at least 25%.
“This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman,” SSA explains on its website. “Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future.”
That’s reassuring for many people, but it depends on lawmakers in both parties coming to some kind of agreement. In this hyper-partisan atmosphere, how likely is that?
“My political calculus tells me that Congress has no choice but to enact the necessary provisions to increase the trust,” Terrell Finner, director of fundraising at Sole Strategies, a political action group, told ConsumerAffairs. “A reduction in Social Security benefits would burden our most vulnerable citizens and send the economy into a downward tailspin.”
In fact, there is evidence that some key members of Congress have quietly begun work on finding a solution. President Biden has also backed proposals to raise revenue by making more of taxpayers’ income subject to the FICA tax, which supports Social Security and Medicare.
Currently, the government stops taking out the FICA tax after a wage-earner has earned $162,000 in one year. Biden has proposed expanding that to $400,000. Treasury Secretary Janet Yellen has said she supports increasing revenue for Social Security but believes cuts in entitlements will also be part of the formula.
According to The Hill, Sen. Bill Cassidy (R-La.) and Angus King (I-Maine) are trying to craft a compromise that could win votes from both sides of the aisle in a narrowly-divided Congress. One of the proposals reportedly includes establishing an investment fund to contribute to the trust fund.
It’s been done before…
As recently as 1982 Republicans and Democrats successfully worked together on a compromise to shore up the retirement fund. In 1983 President Reagan signed legislation that increased the Social Security and Medicare tax rate while also delaying when annual cost of living adjustments (COLA) kicked in.
So it’s possible that over the next decade, Congress can find a way to maintain Social Security in its present form. As a hedge, Finner suggests people approaching retirement maximize their savings.
“It could take months or years to come to an agreement on Capitol Hill,” Dinner said. “I would highly advise folks in their 50s should start taking precautions to position themselves to holdover in the face of a potential fallout over a limited benefit.”
Finner says socking away as little as 3% of their current income each year could guarantee financial safety “in the unlikely event of a cliff.”
Written by Mark Huffman for Consumer Affairs ~ January 29, 2023
FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U. S. C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
Please allow me to introduce myself; I am Jeffrey Bennett, President of Kettle Moraine, Ltd., the parent of Sierra Madre Precious Metals.
I have been married for 52 years with two children and four grand-children, a veteran of Viet Nam, student of history (both American and film), and was host for fifteen years of Perspectives on America on the alternative airwaves, covering such subjects as, health and wellness, news, political satire, education and editorial commentary on current events through the teaching of history, and Protecting Your Wealth. In early 2018, I took a several month hiatus to complete some family business but returned to airwaves April 17, 2018).
At the age of ten, I sat in a bank-vault in the Citizens Bank of Mukwanago, Wisconsin with my grandfather going through bags of old American Peace dollars, hand-selecting each coin as dated rolls of 20 coins were carefully put together and rolled. Learning of the history of these beautiful pieces of Americana, I asked my grand-father, "Why are we doing this?" to which he replied, "Because someday they are going to do the same thing with the silver in our money that, that (S.O.B.) Roosevelt did with gold in 1933." It took only six-years for his prediction to come to pass at the hands of a disciple of Roosevelt's... and what will a Federal Reserve 'dollar' purchase today - and what will that old 90% Silver Peace Dollar purchase?
Although at the age of ten, there was little understanding of the meaning of it all, over the next half-century I became well-versed on the subject matter. During this summer of my education, I began to purchase silver coins as a collector and some small, international gold coins two years later - not an easy feat in the shadow of the Roosevelt confiscatory policies of 1933. Although those policies remained in effect until the mid-1970's, it was not until 1991 that I found that one could make a living providing precious metals and collectible, historic numismatic coins to a willing and concerned clientele.
It was also during that year, that I began a relationship with one of the first Trust companies to give the public access to gold and silver as part of an Individual Retirement Account (IRA) - and Kettle Moraine, Ltd., founded in 1995, but have ceased providing service due the the intense change-over of the provider.
In November 2011, after a 15 month broadcast on another network, I returned to the airwaves with my then revamped program, Life, Liberty & All That Jazz, and for over a quarter-century, I have been proud to serve the family of listeners of my numerous broadcast programs for physically-held precious metals for investors and collectors alike. On March 23, 2020 I launched my brand new - appropriately named program, The Edge of Darkness on the Republic Broadcasting Network, and thus continue to remain available to our long time clients and their families. Ah yes - find out what "inter-generational" wealth provision has done for our clients over the past three decades.
Don't buy the sizzle of that steak until you understand the cost! In other words, don't buy the bull being dispensed by the 'rare coin' pitchmen until you understand the full story. We, at Sierra Madre Precious Metals, will be proud to serve your needs.