Is Social Security Coming to an End?
There has been a growing concern regarding the diminishing assets of Social Security and its capability of continuing payments now and into the future. In prior years, the amount of taxes Social Security has collected has exceeded their payment obligations. When this is the case, any excess funds are deposited into a trust account. The assets in the trust are invested in US Treasury bonds which generate additional revenue for the Trust to supplement future payments.
For the first time since 1982, the Social Security Administration has had to tap into the trust fund to fulfill their payment obligations. Analysts estimate that the trust fund could be completely exhausted by 2034 if there are not any modifications implemented. But what does this mean for you?
The system going bankrupt does not mean that there is not money left and your checks are going cease. The amount of taxes brought in annually would be enough to sustain 75% of the benefits owed to all individuals. While there are not any Congressional plans in the pipeline to rejuvenate the system quite yet, potential remedies are well known, but Congress hasn’t had the will power to fix the system before the situation worsens.
Ideas have been floated about raising the amount of taxes deducted from paychecks, raising the amount of pay that is taxed for Social Security (currently $128,000), raising the age which individuals are able to receive a full retirement benefit, reducing the annual adjustment for cost of living and cutting benefits as a last resort. Most believe, including us at PWFS, there will not be any impact to benefits received by Americans 55 and older. While a 25% haircut will have a major impact on many individuals, it is reassuring to know the majority of the payments will continue, even if the Trust is completely depleted. In the meantime, the best thing you can do is to call your congressperson and senators to press them into action.