Can Social Security Be Saved?
Fill in the blank. “Social Security will run out of money in the year _______?” This question has no easy answer due to our economy. The more people paying Social Security Tax the safer the fund is.
Over the next 20 years about 10,000 Baby Boomers, children born between 1946 and 1964, are retiring every single day.
Three hundred thousand people each month will be drawing pensions, retirement plans and Social Security for the next 20 years.
Can Social Security survive this level of withdrawal when there are fewer people working, and automation is replacing workers on a daily basis?
Currently, Social Security is expected to run out of money in 2033. After that only 75% of payments promised will be paid unless some drastic changes are made.
Some Ways To Save Social Security
There have been many suggestions on how to slow or stop Social Security’s demise. Here are a few of the most popular.
- One easy answer is to increase the retirement age. Currently if you were born after 1967 your retirement age is 67. Increase the age to 68 and you would reduce the shortfall by about 15 percent. Age 70 would reduce it 21 percent.
- Do Bill Gates or Warren Buffet need Social Security? Another popular idea is to eliminate Social Security benefits for those whose income is above a certain level. While this would be a small reduction combined with other measure it couldn’t hurt.
- Today’s workers pay 6.2 percent of their earnings into Social Security up to an income of $113,700. If the rate were increased to 7.2 percent by 2036 it would cut the Social Security debt in half. An increase to 7.6 would eliminate the gap entirely. Sixty-nine percent of American workers favor this plan.
- If the above cap of $113,700 were eliminated between 2015 and 2024, and people paid into the plan regardless of income, it would reduce the deficit by 71 percent.
- Social Security benefits are adjusted for inflation each year. If “Cost of Living” adjustments were made instead it would reduce the deficit by about 20 percent. A person receiving an inflation adjustment of $30 a month would be reduced to about $27 per month. Only 30 percent of Americans favor this kind of adjustment.
Some Final Thoughts
Implementing some or all of these adjustments would seem to have little impact on seniors in general. South Central Montana is not a cheap place to live. And for senior citizens who are stretching every dollar changes are hard to accept.
Are you counting on Social Security to be there when you retire? Will that be your principle source of income? Will it be enough?
These are questions everyone should be asking as they inch toward that retirement goal.
A good retirement plan, a savings plan, and other passive income will be the difference between your “Golden Years” or a retirement of poverty and dependence.