Our Social Security (SS) system is in terrible financial shape. It has been for several years and retirees and future retirees are at a high financial risk. The SS administration projects that the Social Security Trust Fund (SSTF) will soon be bankrupt. If no action is taken to remedy the situation, they project a 23% reduction in benefits and/or a 33% increase in payroll taxes will be needed in 2033. There are now almost 54 million retirees receiving an average annual SS benefit of $14,748. For 43% of unmarried SS beneficiaries, SS makes up 90% or more of their income. Just a 10% reduction in benefits would push millions into poverty, which would most likely require them to seek other social programs, further burdening the government. Such a reduction would take almost 80 billion dollars annually out of the US economy. That means loss of jobs, which in turn would push even more people into poverty, costing the government (us) a loss of taxes on the jobs lost. The proverbial vicious cycle.Many commissions and congressional committees have been appointed and organized to address this issue; all place the blame on improved longevity, the increase in the retiree population receiving benefits (retiring baby boomers) and the low birth rate. The solutions that came out of these groups (as well as financial journalists and think tanks) are all basically the same. The three suggestions receiving the most publicity are 1) reduction of retiree benefits, 2) delaying the eligibility age to receive benefits, 3) increase contributions or in some cases, a combination of the three. Unfortunately, they all come at the expense of the retiree. Just a 10% reduction in benefits would cost retirees almost 80 billion dollars annually, which would also be taken from our economy. Delaying the eligibility age would eliminate approximately 100 billion annually from the economy and would have an unintended effect on those retirees in the lower half of earnings. Since 1977, the life expectancy of male workers retiring at age 65 has risen 6 years in the top half of income earnings but only 1.3 years in the bottom half. If the retirement age is increased by two years again as it was in 1983, it is in effect cutting the retirement life shorter for the lower half of income workers by .7 of a year. In addition, it would reduce the total lifetime social security benefit for each retiree by approximately $28,496. But there is way to save SS without reducing benefits. This book will detail that process.
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