WILL SOCIAL SECURITY GO AWAY?
Social Security is the foundation of millions of Americans retirement benefits. On June 23rd, Social Security trustee’s announced that Social Security retirement benefits will be insolvent in 2034. Does that mean Social Security will not pay you anything? No!!! It means that Social Security will start to lower its benefits out in the open. Your Social Security benefits will be lowered by 21%. This may seem unreasonable, but guess what? The Social Security administration has already been lowering its benefits without many Americans being aware of it.
One way that they have lowered your benefits is by closing loopholes. Last November in the middle of the night congress closed the file and suspended loophole for Social Security benefits. This allowed married couples to piggy back off of each other’s Social Security benefits, in order for them to maximize their Social Security benefits. The government said that only the rich did this so it’s no biggie, but in reality they were not being truthful. The rich doesn’t worry about Social Security benefits as it’s only a small portion of their retirement benefits. It’s the everyday working-class Americans that are the ones relying on this income.
The 2nd way they have lowered benefits are by closing pay increases. When you are Social Security beneficiary you get annual increases in benefits to help you with the increase in the cost of living. Last year they said they were no increases for Social Security beneficiary and this year they are only raising it .2%. If you are like me when you walk into the grocery store you see the cost of ice cream and other goods have increased. The cost of cable has went up drastically. Also; the biggest expense for retirees healthcare has went up.
The way that the government gets away with it because they are always changing what is included when they figure out the cost of living. The things that seniors pay for the most food, energy and healthcare are not included.
Let me ask you a question. If you’re a politician and your biggest voting block is over 50 would you make sure they keep all their Social Security benefits? Yes of course, but things are not always as easy as they seem. Changes happen often and one of the biggest changes we may see are tax increases. There are three ways we might see tax increases. First would be by increasing the taxes of Social Security over $118,500 a year. Do you believe that after you make $118,500 you don’t pay social security taxes? The 2nd way is by increasing the rate. The rate that we pay for Social Security is 12.8% a year. They might increase that percentage down the road. The last would be to make our Social Security benefits more taxable when receiving benefits. Do you know if you make certain amount of money, you have to pay taxes on Social Security? That is called double taxation.
Other changes we might see are the age of benefits will increase. Instead of being able to start Social Security at 62 years old they might push it back to 63 years old or even older. This could cause problems because so many people are retiring earlier than expected due to job changes or availability.
So to answer the question “Will Social Security go away?” It will not, but there will be some changes that will affect our lifestyle in retirement. We need to come up with strategies to consider lower benefits and higher tax increases.