Social Security Fears Are About the Solvency Issue

Even when you have your retirement savings plan in order and understand your benefits, it is important to consider that your decisions affect more than just yourself, especially your choices about Social Security. After 2035, only enough payroll taxes would be collected to pay 79 percent of benefits, forcing an automatic 21 percent cut for the estimated 90 million Americans forecast to receive Social Security.

Throughout the years, the Social Security program was further strengthened to include survivors and disability benefits for workers and their families.

But Americans have doubts that Social Security will be there for them when they retire. Social Security payments now replace about 40 percent of past earnings for someone who worked all their adult life at average earnings and claims benefits this year at the traditional retirement age of 65. The tax is applied to the first $118,500 of a worker’s wages, a level that increases each year with inflation.

Social Security’s long-term financial problems are largely a result of demographic changes.

As we celebrate the history of Social Security, let’s recognize that we must do more than protect and defend this program. Thirty-nine percent said they faced a major health need or problem in their family that kept them from saving.

Any way you look at it, Social Security is a big program.

Note that if you don’t work at all in the years you aren’t in Social Security-covered employment, you get a higher benefit than if you do work. The trustees predict that an immediate benefit cut of 16.4 percent would close the funding gap if it applied to everyone entitled to receive Social Security.

CBPP shows that Social Security benefits are much more modest than you might realize. Its benefits are also counted on by widows, people on disability and young children who have lost a parent, among others. The second tier is 32 percent and the third tier is 15 percent.

Perennial warnings from Capitol Hill, fiscal watchdog groups and government officials responsible for overseeing the program help to explain the public’s angst over the future of the program, particularly when the economy fluctuates between boom and bust.

Whether that myth becomes a reality, will be up to Congress. now the retirement trust fund is paying out more than it’s bringing in. Others think the tax should be raised, the retirement age should be raised or the benefits should be cut down. Some companies provided pensions, but they were a rare benefit.

SSDI’s trust fund – money that has accumulated beyond what is needed to pay its immediate obligations – will run out in 2016.

In 1940, the first year benefits were paid, just 220,000 Americans were signed up. The 2015 report actually had some good news about the retirement system – it is in better shape than their estimate a year ago. The non Social Security-covered retirement program is considered to be in lieu of Social Security.

Democrats say they too want to reduce fraud and to encourage disabled workers who can work to re-enter the workforce. This trust fund is now $2800 and should maintain the balance for Social Security until 2033. If you happen to be married, this strategy greatly increases your odds of benefiting from this strategy.