Social Security recently turned 89 years old, but questions about its solvency remain a concern leading up to the November presidential election. The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935 to provide federal benefits for older Americans. However, the trust fund for retirement benefits is projected to be depleted by 2033, prompting lawmakers to consider possible solutions to save the program. A Gallup poll showed that 80% of Americans are worried about the availability of Social Security benefits in the future.
Financial planner Justin Rush believes that Social Security is more secure than many people think, even after the reserve funds are exhausted. He mentioned that retirees would still receive about 83% of their benefits even if no changes are made. However, Rush emphasized that changes are necessary to sustain Social Security in the long run. One proposed change includes raising the retirement age, which has already been raised gradually over the years.
The current threshold for earnings subject to the Social Security payroll tax is $168,600, which means that high earners stop contributing once they reach that amount. Democrats have suggested increasing the threshold to $400,000, but opponents argue it could lead to discrepancies in benefit payouts. The overall population growth in the U.S. is also a factor affecting Social Security, as more older individuals are collecting benefits while fewer younger people contribute to the system, depleting reserves over time.
The average life expectancy has significantly increased since Social Security was established, with individuals now living longer on the program than originally envisioned. This has put additional strain on the system, requiring policymakers to find sustainable solutions to ensure the program’s longevity. Rush noted that some younger Americans are already planning for a future without Social Security benefits and are taking proactive steps to secure their retirement independently. He emphasized the importance of both parties coming together to address the challenges facing Social Security for the benefit of all Americans.
In conclusion, the future of Social Security remains a bipartisan issue that needs to be addressed urgently. With the program’s trust fund projected to be depleted by 2033, policymakers must consider various solutions, such as raising the retirement age and adjusting payroll tax thresholds, to ensure the long-term viability of Social Security. As the population ages and life expectancy increases, it is imperative to find sustainable solutions that will support future generations of retirees without compromising the benefits of current beneficiaries.
