The most recent Social Security Trustees Report projects that – without changes – the current system will only be able to pay about ¾ of promised Social Security benefits to retirees in about 20 years. So, if I were scheduled to receive $2,000 per month, that would be reduced to about $1,500. Now, that is a substantial reduction, but we believe – and we think history agrees – that legislators will likely make tweaks to the system to keep it intact.
What kinds of changes are likely?
An increase in Full Retirement Age for younger workers.
Full Retirement Age is the point at which a retiree can receive 100% of benefits, and that is currently between 66 and 67 years old. Perhaps this will increase to 68, 69, even 70?
An increase in the amount of annual wages subject to Social Security tax.
In 2015, the first $118,500 of a worker’s wages is subject to this tax. It could very well be increased creating more revenue for the govt. As an example, there’s currently no cap on wages subject to Medicare tax.
An increase in the Social Security tax rate.
Workers and employers each currently pay 6.2%, but some have proposed raising this rate.
A change in Social Security Bend Points
Social Security bend points could change causing high-income earners’ benefits to be an even smaller percentage of their pre-retirement earnings.
Many other possibilities exist. The bottom line is, in our opinion, it is not logical that Social Security will disappear. Instead, fixes will likely be made over time. The questions are which fixes and when?
For more helpful information, visit our website at PayneWealthPartners.com. Thanks for watching!
Published: January 30, 2015
Authored by: Josh Wichman, MBA
Direct Phone: 812-602-6319
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