While the Election Smoke is Clearing, Some Thoughts on Social Security’s Future - NAPA; U.S News
The race is over at this point, except for resolution of a few House seats, so attention can now be focused on what might happen on Social Security reform. As most folks know, we’re about eight years away from the “cliff”–the projected full depletion point for Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund. Reaching this point, according to the program’s Board of Trustees, would trigger a 21% across-the-board reduction in monthly benefits. It’s not difficult to imagine the hardship that would result from this happening since an estimated two-thirds of the senior population relies on Social Security for more than half of their income in retirement.
Over the coming weeks, we can expect to hear various thoughts on what will happen, if anything, to Social Security reform in the next Administration. The run-up to November 5 didn’t provide any clear perspectives on how the funding crisis will be addressed, especially concerning the more significant issue of insolvency. Meanwhile, organizations like The National Association of Plan Advisors (NAPA) have begun to offer conjecture on possible ramifications for retirement policies, as highlighted in their post yesterday on napa-net.org outlining what changes the incoming Senate and House configurations might put forth. Included in the NAPA article is a reference to the American Retirement Association’s intent to focus on the expansion of employer-sponsored retirement plans.
In a related article, U.S. News and World Report’s Maryalene LaPonsie speculates on five ways the incoming Trump Administration “… may have far-reaching effects on retirees nationwide.” She provides conjecture on the key elements discussed by the President-elect during his campaign, including the elimination of tax on Social Security benefits, the future of the Tax Cuts and Jobs Act of 2017, and overall changes to retirement and healthcare policies. Read her post here.
So, as we ponder Social Security’s future, the search for pragmatic solutions to the long-term funding problem will continue. An example of one such solution can be found in the Association of Mature American Citizens (AMAC, Inc.) Social Security Guarantee. AMAC believes Social Security must be preserved and modernized. This can be achieved through slight modifications to cost-of-living adjustments and benefit calculations for high-income beneficiaries, coupled with gradual increases to the full (but not early) retirement age. AMAC supports an increase in the threshold where benefits are taxed and then indexed for inflation and calls for eliminating the reduction in benefits for those choosing to work before full retirement age. Summaries of the AMAC position–the AMAC Social Security Guarantee–can be viewed at AMAC.us.