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Is Social Security Going “Broke?” - Inc. Magazine
Despite the assertion in this article’s headline that “SSA Going Broke in 7 Years,” the reality is that no such fate awaits you if you are collecting SS benefits. In other words, you aren’t in danger of your Social Security benefits going away, nor are those now planning to retire in danger of losing out on all their SS benefits. So, although this article suggests that SS is in danger of “going broke in 7 years,” you don’t need to worry that you will lose all you SS benefits that quickly.
The headline of this article is obviously designed to get your attention, but a better description is that Social Security is “facing some financial difficulties in about 7 years.” That doesn’t mean the program is “going broke,” but it does mean that the SS trust funds, which are now used to supplement and pay full benefits to all, will be fully depleted in 2033 unless Congress acts soon to reform the Social Security program. If those trust fund reserves are fully depleted, Social Security can only pay out what it receives in annual revenue (essentially, from payroll taxes and income tax on benefits), and that would mean about a 23% cut in everyone’s monthly benefit payment. Although that is certainly dire, it is a solvable problem, for which the article suggests a fix.
This article at Inc. magazine discusses a proposal from the Committee for a Responsible Federal Budget (CRFB) to cap the maximum monthly benefits available to all beneficiaries at $50,000 per year for individuals, or $100,000 per year for couples. The proposal is just one of many which might be considered by Congress to restore Social Security to solvency, and Congress much act soon, for sure. Whether this proposal is a viable long term solution is debatable, but it is certainly worth evaluating when Congress gets serious about SS reform. Click here to review this Inc. article about a potential option to resolve Social Security’s financial dilemma.
The Association of Mature American Citizens (AMAC) has also proposed a solution to Social Security’s financial issues. AMAC believes Social Security must be preserved and modernized to serve future generations. AMAC’s position is that this can be achieved without payroll tax increases through relatively minor program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating initial benefits for higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) changing the taxable maximum formula to address the unintended loss of revenue; (4) improving survivor benefits, (5) eliminating the reduction in benefits for those choosing to work before full retirement age; and (6) improving savings tools for future retirees, including a savings account that builds estate value. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade. See AMAC’s proposal for Social Security reform here.