Latest News
Solutions for Social Security’s Financial Woes - GoBankingRates
To politicians, Social Security is viewed as a “third rail,” with most not willing to even discuss the modifications which will inevitably be needed to restored the program to financial solvency (“third rail” refers to the electrical power source for most urban subway systems). In other words, touching Social Security (especially “cutting” Social Security) could equate to political suicide. Which is precisely the reason that Social Security is now facing a serious threat of cuts to everyone’s monthly SS benefit.
The worker payroll (FICA/SECA) taxes which fund Social Security have been inadequate to pay for full benefits for well over a decade, and that has been known to Congress for many years. Fortunately, substantial Social Security reserves (investments in special issue government bonds) have provided supplemental funds to allow full monthly benefits to be paid to all beneficiaries. But, according to the Trustees of Social Security, those reserves will be fully depleted in about 2033, which would result in an across-the-board reduction of about 23% in everyone’s monthly Social Security payment. And that would be a very hard financial hit – likely a financial crisis – for many American seniors. Reality is a sobering thing, and Congress must act soon to avoid this looming crisis!
What to do? This insightful article by GoBankingRates’ Andrew Lisa lays the options out succinctly – raise the full retirement age; raise taxes; “means test” benefits; diversify funding; and eliminate credits for delaying. All of which would likely be viewed as “touching the third rail,” but each of which are very deserving of Congressional consideration to save a program on which most American seniors rely to pay their monthly expenses. To quote from the article: “While none of these changes are politically simple, the longer the government waits, the more disruptive the eventual solutions will be.” The time for Congress to address Social Security reform is now. Click here to read this important GoBankingRates article posted at NASDAQ.com.
As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized to meet the demands of 21st-century economics. AMAC’s position is that this can be achieved without payroll tax increases via relatively slight program modifications, including cost-of-living adjustment (COLA) process changes and modifications to the formulas for calculation of payments to 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) improved survivor benefits, (4) eliminating the reduction in benefits for those choosing to work before full retirement age; and (5) improved 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 proposed solution here.