Will there by anything left when I retire? Will my benefit get cut? These questions and more are discussed in the annual report published by the Board of Trustees of the Federal Old-Age And Survivor and Federal Disability Insurance Trust Funds (Doesn’t that sound like the name of a group who would publish a 276 page report?). This group is in charge of reviewing the trust fund that pays out Social Security benefits.
Summary of 2019 Report
Current Costs and Income - In 2019, the total cost of the program was just over 1 trillion dollars and there was just over 1 trillion dollars in income. We broke even.
From 2021 to 2035 – Starting in 2021, it is projected that costs will be more than income and they will need to dip into their reserves. The reserves are almost 3 trillion dollars, roughly 3 years of expenses. By 2035, they are projected to be depleted.
Solutions – Just because reserves are depleted in 2035, does not mean Social Security goes away. It simply means that benefits might be cut if no changes occur. The board provided 3 possible solutions that are projected to keep Social Security solvent through 2094.
- Increase payroll taxes by 12.4% to 15.54% (a 25% increase). This could mean both the employee and employer pay an additional 1.57% into Social Security.
- Cut benefits by roughly 20% for current and future beneficiaries. For example, if you were projected to get $2,000, you would get $1,600.
- A combination of the two listed above.
I do not want these solutions to downplay how serious the issue is. Action should be taken, preferably sooner rather than later, to protect current and future generations.
Disclaimer: Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized financial, tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Every individual situation is unique and a proper plan should be put in place before making a decision regarding Social Security. The figures presented are based on many assumptions as cited in the referenced Annual Report. Please consult the Annual Report for further details. The Social Security Administration alone makes all final determinations on your eligibility for benefits and the benefit amounts. You should consult with your local Social Security Office before acting upon any information provided. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss.
 THE BOARD OF TRUSTEES, FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL DISABILITY INSURANCE TRUST FUNDS. “THE 2020 ANNUAL REPORT OF THE BOARD OF TRUSTEES OF THE FEDERAL OLD-AGE AND SURVIVORS INSURANCE AND FEDERAL DISABI.” 22 Apr. 2020.