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The most recent Social Security Trustee’s report was generally positive for those retiring within the next 20 years or so. There will plenty of money in the program’s trust fund to pay for full retirement benefits.
But what was missing from the report is the critical information most retirees need to know: How to best “claim” benefits when you choose to retire. I’ll get to that subject later. First, let’s look at the big picture with Social Security:
Since the report covers three big components of the Social Security benefits program — Retirement, Medicare and Disability — you have to break down the funding of each program. The retirement fund is fully solvent until 2033. That means, based on present assumptions, the Social Security kitty will have enough money to pay full benefits until that time. If nothing is done to bolster this fund, benefits will either be cut or taxes raised.
The hospital insurance fund for Medicare is also in pretty good shape, relatively speaking. It has enough money to pay full benefits until 2030. The picture is dim, however, for the disability program, which has been in need of funding and benefit reforms for years. This fund is projected to run out of money in two years.
This doesn’t mean that everything’s hunky dory with the bulk of the Social Security program, which also includes survivor’s and spousal benefits. You have to keep in mind that the fund’s resources will be crunched once Baby Boomers are mostly all into the system over the next two decades and there are fewer workers to pay into the trust fund.
Under no scenario does Social Security, Medicare or SS Disability have enough money in the till to survive the massive retirement of Baby Boomers. Ultimately, Social Security needs a long-term funding fix, although Congress has been loathe to even talk about it. Social Security has become the Voldemort — he who shall not be named — of American politics. Here’s a sampling of the problem, as stated by the public trustees in the report:
“The urgency of addressing the financial challenges facing both programs is underscored by the fact that the financing shortfall in the theoretical combined Social Security trust funds has now grown to a size substantially greater, even relative to today’s larger economy, than the shortfall corrected in the landmark bipartisan Social Security amendments of 1983.
Furthermore, the longer corrective action is put off, the more severe the measures will have to be and the fewer the cohorts who can be asked shoulder a portion of the burden… Unless Social Security’s historical financing structure is to be altered to finance some or all of the program from the Federal government’s General Fund on a permanent basis, and thereby weaken the historical tie between individual contributions and benefits, legislators must act to eliminate this financing shortfall. This task becomes progressively more difficult, and therefore less assured of success, with each passing year.”
So stop fretting about whether or not Social Security will be there — chances are good that it will be around for a long time — start doing your homework on how to best benefit from the system. The time you put in now will make a big difference later.
What's Missing From the Social Security Report? - Forbes
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