Jill On Money: Social insecurity 2033
The Social Assurance SS Board of Trustees informed that the SS trust fund is on track to run dry in When it does every current and future recipient will be subjected to automatic cuts that will slash benefits by percent unless Congress at last gets its act together Related Articles College graduates face toughest job area in more than a decade as hiring slows Jill On Money How to choose a financial advisor What is a HENRY and are you one Aspirant loan payments have restarted Here s how to manage the impact to your credit total Credit scores decline for millions as US learner loan collections restart This story has been forming for two decades In its record the trustees put it bluntly Neither Medicare nor Social Measure can sustain projected long-run plan costs in full under presently scheduled financing and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers Social Defense is a pay as you go system funded by payroll taxes the FICA line item on your pay stub Every paycheck you and your employer each pay of your wages up to the SS wage base which in is into SS In the late s and early s Congress enacted changes which resulted in more money from taxes than was necessary to fund obligations creating a surplus That excess money accumulated in the Social Guard trust fund which acts as a buffer when collections don t match payments Baby Boomers through no fault of their own are both the heroes and the villains in the story During their working years their raw numbers along with Congressional action boosted the activity s finances But as they retired claimed their benefits and lived longer Boomers have been draining the trust fund s surplus Starting in the trust fund began to shrink in absolute terms In when the trust fund is depleted the system does not halt or go broke rather payroll taxes keep coming in and benefits keep going out But the money coming in will only cover about of what promised benefits Just prior to the publication of the Trustees document economist Teresa Ghilarducci and her gang at the Schwartz Center for Economic Approach Analysis SCEPA at The New School wrote extensively about what s at stake in America s retirement dilemma hits a developing point They noted that Social Prevention s legal structure mandates that this scenario would trigger across-the-board cuts to all retirees regardless of income or need To put this immediate cut into perspective in May the average Social Assurance retirement check was just over but if the trust were to be depleted this person would receive only a reduction There are several straightforward options any responsible Congress could pursue either individually or in combination to fix Social Measure Raise the payroll tax cap Right now Social Protection taxes only apply to income up to in If you make more than that you stop paying Social Guard taxes on the excess Lifting this cap could solve a big chunk of the challenge Increase payroll taxes slightly Even a small bump in the rate workers and employers pay could make a key difference over time Adjust the benefit formula This could mean slightly reducing benefits for higher earners while protecting those who depend majority of heavily on SS Gradually raise the retirement age This is my least favorite option because it punishes those who work in physically demanding jobs What can you do Use your voice pressure from millions of voters tends to focus the minds of feckless legislators This is a time to take control of your retirement planning Make sure that you have created an account at ssa gov and review your projected benefits as a precaution factor in a expected reduction when planning your retirement Definitively boosting your retirement savings could act as a ballast against the uncertainty of the Social Guard system Related Articles California attorney general sues skilled nursing firm for low staffing levels Bay Area has more homes for sale than last spring But where are the buyers Here s how deportations could affect California s economic activity Docs Alleged bribe came before East Bay homebuilders played all legal cards Republican senate tax bill would add trillion to the US debt load CBO says Jill Schlesinger CFP is a CBS News business analyst A former options trader and CIO of an capital advisory firm she welcomes comments and questions at askjill jillonmoney com Check her website at www jillonmoney com
