Let's say you've been paying your power bill dutifully every month for years. Then one day, you get a letter from the utility company saying that starting next year, your lights will only work 76% of the time — but you'll keep paying the same amount. That's basically what could happen with Social Security, the federal benefits program for retirees and people with disabilities. Starting in 2035, Social Security will be unable to pay out full benefits, according to a new government report. Earlier forecasts predicted that the program would be insolvent a year sooner, so the new report is a bit of good news. Folks are unhappy nonetheless. "Ok, so we should stop paying into it right?," one person posted on social media site Twitter/X. Another said: "If Social Security funds run out of money in a decade then dead ass stop taking out of my check." There were understandably references to U.S. taxpayer dollars going to foreign aid, including to Israel's war in Gaza. And yet still quite a few people who cast it as a Boomer problem. Here's the thing: Boomers will be fine; it's the rest of us who'll get screwed over if Congress doesn't act. Let's talk about it. |
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In the early 1980s, Democratic Speaker Tip O'Neill described Social Security as "the third rail of American politics," referring to the electrified line of subway tracks that can fatally shock anyone who touches it. Later, it was revealed that Kirk O'Donnell, an O'Neill aide, actually coined the phrase that is now as ubiquitous in politics as kissing babies. So has the handwringing over the program's future. Social Security has been a controversial focal point of every federal election for 40 years. The conventional wisdom as stated, has always been to leave Social Security untouched — never suggest a reduction of benefits or raising the retirement age. President Biden, responding to the new forecast, issued a statement this week saying, "My plan would extend Medicare solvency permanently by asking the wealthy to pay their fair share and lowering prescription drug costs. And I am committed to extending Social Security solvency by asking the highest-income Americans to pay their fair share without cutting benefits or privatizing Social Security." Donald Trump has suggested that there are savings to be found in increasing efficiency, telling economist Paul Krugman, “There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements.” Of course both leading candidates are talking to older voters, who are the most reliable voting bases for both major parties. That won't be true by the time we get closer to insolvency, however. The leading edge of Generation X, born in 1965, hits Social Security's full retirement age of 67 in 2032, just as the Congressional Budget Office (CBO) predicts the program will hit rock bottom. This means that not just Generation X, but Millennials, Generation Z, and even the budding Generation Alpha, are all staring down the barrel of an empty Social Security piggy bank, with no full retirement benefits in sight. |
—For people over 65, Social Security checks account for about 30% of their annual income —The Congressional Budget Office estimates that spending on Medicare is expected to jump from $1.3 trillion in fiscal year 2023 to $2.5 trillion in fiscal 2034. But it's not people approaching retirement age that need to worry about the solvency of Social Security —Members of Generation X and younger are set to receive a mere fraction of their promised Social Security benefits, somewhere between 75% and 77%, according to various forecasts. —For the average recipient, this translates to a staggering loss of between $4,900 and $5,300 from their current annual benefit of $21,100 — Social Security Trustees estimate that maintaining scheduled benefits would require extra $2,600 in Social Security taxes taken from a median household that has about $74,600 in annual income, according to the Economic Policy Innovation Center |
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As always, never hesitate to inbox me with thoughts, to chat or to rant. Peace, R.L. |
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