There seems to be an increasing amount of misinformation circulating in regard to the Social Security system. The following information is sourced from: www.ssa.gov.
The purpose in writing this blog is to correct this myth:
The Social Security System is going to be bankrupt by 2034 (or any other year you may have heard).
Here’s why this statement is not true:
People who are employed will continue to contribute to Social Security from each and every paycheck.
In fact, we now know that those earning over $118,500 a year will pay Social Security taxes up to $127,200 of annual earnings. This represents a 7.3% increase in the “maximum taxable earnings amount” from 2016 to 2017.
What is true is that the 2016 Social Security Board of Trustees report does anticipate the program will exhaust its $2.8 trillion-plus in existing spare cash by the year 2034.
What this means is the Social Security administration would pay out in benefits what it receives in payroll taxes.
Without other changes to the Social Security system, the trustees anticipate this could lead to a 21% reduction in benefits across the board. Of course, there are many options that could be implemented between now and then to create better results for those receiving a Social Security check.
Regardless of what is or is not enacted, while obviously not desirable, a potential reduction in benefits is a far cry from bankruptcy. Please help silence those perpetuating the fear-inducing myth.
What is clear is that we are each responsible for our own financial security. This means that, beginning with our first paycheck, ideally we need to be saving 10% of gross income.
Since we know this is not the case for most people, the Resonate team is ready to support you in solving your retirement income puzzle. The earlier we begin, the easier it is to create successful outcomes.
We look forward to hearing from you!
Barbara A. Culver
CFP®, ChFC®, CLU, AEP®