The Long-term Security of Social Security

By Scott Thoma October 02, 2017


Reaching retirement is a major goal for most people – and so is having enough income in retirement. With concerns over the size of the U.S. debt and budget deficit, coupled with the influx of retiring baby boomers, many are asking, "Can Social Security remain a dependable source of income?” While di•fficult decisions may need to be made, we believe the answer is “yes."

What's the solution?

According to the 2017 Social Security Trustees report, if no changes are made to the program, by 2034 the trust fund would need to reduce benefits, paying out about 77 cents for each dollar of projected benefits. That said, there are a number of key items that could be changed to help improve the health of the program, such as:

  • 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
  • Adjustments to benefits based on income or wealth

For example, the Congressional Budget Office estimated that raising the combined payroll tax from 12.4% to about 15% would fully fund the program through at least 2091.

The above list is not exhaustive, and changes could include combinations of these items. Additionally, any changes could be phased over time to lessen their impact. But the key is that Social Security can be strengthened to keep it on solid footing for years to come. The question is what will be recommended and how soon Congress will act to improve the program’s long-term outlook.

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 to help ensure it remains on solid ground.

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