FREE NEWSLETTER
I listened to an interview with a former Social Security deputy commissioner, and one point stuck with me: Social Security isn’t going to vanish, but Congress still needs to deal with its funding problem.
I’m getting close to retirement, so I’d like to know what to plan for. I can run the numbers with a smaller benefit. What I can’t do is guess which changes Congress might make—or whether they’ll wait until the trust fund is nearly depleted before making them.
I know neither party wants to be the one proposing higher taxes or changes to benefits. But the longer they wait, the harder the fix becomes. I’d rather hear the options now and have time to adjust than get a last-minute deal after years of reassuring headlines and political finger-pointing.
What would a fair compromise look like for current retirees, people nearing retirement, and younger workers? Do you think Congress will act before it has to? Does anyone think Congress will act early? Or is this destined to be another deadline-driven deal?
Jeff
Here is the interview if you want to watch. Social Security Will Change—Here’s Who Gets Hit First | Jason Fichtner
Great Questions on SS. I believe SS will continue, but at worst case will pay say 80% of today. What they should do is raise the retirement age to 73 or 75 just like when you have to take an RMD. The other thing I propose is for everyone to pay on their full salary, no stop payments after $184,500. I suggest not raising the percentage. Congress needs to start NOW.
Raising the salary limit does not make SS sustainable, it extend the problem 20-25 years but does not solve it. We need a permanent solution. That simply means adjusting the FICA percentage and the earnings taxed every year to assure the actuarial funding requirements are met. In addition, modify the COLA or eliminate it for those who start SS at FRA with the maximum benefit possible, they should be able to manage inflation in retirement.
Too few officials in Congress are willing to raise the cap on SS taxes. Just raise raise the cap to over $1M or even eliminate it. Less than 20% of people would have to pay more, and it’s the 20% who could most afford to pay more. But Congress won’t do it.
Only 6% of Americans earn over the current cap and it’s been that percentage for decades. I have no problem raising the cap provided SS benefits are also earned based on the additional earnings taxed, even if a new bend point is added at say 10%. But to do otherwise changes the entire concept of Social Security which I believe is risky.