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Regular Daily readers know some key Social Security benefits—worth up to $60,000—will go away after May 1, 2016.
Below, Retirement Insider Editor Bob Irish details what to expect from Social Security in the coming years. It isn’t pretty…
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From Bob Irish, editor, Retirement Insider: It’s unfair for the Social Security Administration (SSA) to change the rules in the middle of the game.
But you’d better get used to it…
When Social Security began in 1935, there were some 40 workers paying into the system for every retiree. Today, there are just 2.8 workers for every retiree.
Something has to give.
The SSA either has to take in more revenue or pay out less in benefits. My guess is we’ll see both.
At some point, the retirement age will be raised. And eventually there will be “means” testing. If you’re deemed “wealthy” by the government, you can expect to see your benefits reduced… or cut altogether—despite the fact you paid into the system for 40-plus years.
And higher Social Security taxes are inevitable. Currently the tax is 12.4%. Employers pay half of that. (If you’re self-employed, you pay the whole thing.) Look for incremental increases as we move forward.
The cap on income that’s subject to the Social Security tax is $118,500. Last year, it was $117,000. And it’ll keep going up. A lot.
According to the Congressional Budget Office (CBO), eliminating the cap altogether would raise twice as much money for Social Security as raising the retirement age to 70.
The elimination of two key filing options (worth up to $60,000 in benefits) was just the first blow in what promises to be a losing battle for American seniors.
It’s never been more important to have alternative sources of income in retirement.
Bottom line: If you don’t need your Social Security income to cover living expenses, my advice hasn’t changed. Take all—or part—of your benefit check and invest it in a low-cost stock index fund. Or the PBRG Legacy Portfolio. And build a supplemental retirement nest egg as soon as you can.
All Palm Beach Letter subscribers can access our Social Security special report right here.
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