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How Secure Is Social Security?

September 12, 2018

Two women and man in meeting

Are you counting on Social Security to be available when you retire? If so, you’re not alone: The program serves as the foundation for many retirement income plans. But concerns over the size of the U.S. debt and budget deficit, coupled with the influx of retiring baby boomers, have made many people wonder about Social Security as a dependable source of income.

The dilemma

Nearly 61 million people receive some form of Social Security, including over 44 million retired workers. This number is growing as 78 million baby boomers face retirement. Given these demographic trends, the growing burden on Social Security is becoming unsustainable: According to the 2018 Social Security trustees’ report, this will mark the first year since 1982 the program will tap into its reserves to cover its payments.

If no changes are made to the program, while benefits would continue to be paid, Social Security would need to reduce benefits in 2034, paying out about 77 cents for each dollar of projected benefits.* Interestingly, in 1983 changes were made to Social Security to put it on more solid footing. Given the current status of the program, changes may need to be made once again.

So what's the solution?

A number of key items could be changed to help improve the health of the program, including:

  • Earliest eligibility age (EEA), which is currently 62
  • Full retirement age (FRA), which currently ranges from 66 to 67
  • Changes to how Cost-of-living Adjustments are calculated
  • Payroll tax rates used to fund Social Security
  • Removing the earnings ceiling for payroll taxes

The above list is not exhaustive. But the key is that Social Security can be strengthened to keep it on solid footing for years to come.

Securing your retirement

Regardless of its future status, Social Security was never designed to provide for all your retirement needs. You still share a major responsibility in “securing” a retirement that aligns with your goals. Your financial advisor can review your entire retirement strategy, including your Social Security options, to help ensure it remains on solid ground.

Important Information:

*Source: U.S. Social Security Administration, Congressional Budget Office.

More Resources:

How Secure Is Social Security?

For most people, having enough money during retirement is a major goal – and Social Security can play an important part in achieving that goal. But can this program continue for the long term? Investment Strategist Scott Thoma talks about the future of Social Security.

Will I have enough money to retire?

The answer starts with you. How do you begin?

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