As we all continue to gauge the impact of coronavirus upon the national and global economies, some analysts are looking forward to the more distant future. While it’s difficult to predict everything down to the last dollar, it is looking like we may continue to see economic impacts for a decade or more. In particular, experts have begun to express concern over Social Security benefits.
Social Security’s solvency is not a new concern. We’ve known for quite some time that once the trust fund is exhausted, incoming taxes each year will only cover about two thirds of benefit payments. That situation was expected to develop around 2035.
For years Congress has debated different ideas to shore up Social Security, from raising taxes to increasing the minimum retirement age. Some want to “means test” the program, making it available to lower- and middle- income retirees only, while others say that we might all have to accept decreased benefits.
Nothing has been decided yet, with the crisis expected to develop about fifteen years from now. But thanks to the coronavirus pandemic and resulting economic downturn, analysts now predict that the trust fund could run out of money about two years sooner, in 2033.
So, what does that mean for the average taxpayer (and future retiree)? If the above information provokes anxiety, we’d like to offer a different (more positive) way to view the situation. Lawmakers were destined to confront this problem sooner or later anyway. Now, with the concern a bit more pressing, they will be forced to deal with it sooner.
So, the good news is that the solvency problem within Social Security will likely be addressed a few years sooner, which means we can get the answers we’ve been awaiting. The down side, of course, is that no one knows how Congress will choose to proceed with this issue.
So, in the meantime, keep in mind that Social Security was never meant to completely fund retirement. The program was conceived as a supplemental income only, and will continue to serve as such. Continue to meet with us regularly to discuss your retirement plan, and we’ll show you different ways to establish income streams for the future.