Will Social Security Be Around When I Need It?
This is a question we often receive from people planning for retirement. For some people, Social Security retirement benefits are an important part of their retirement income strategy and for others it is crucial. Currently, approximately 61 million people receive Social Security retirement benefits (about out one in five Americans). Therefore, the question of whether or not this source of income is going to be available is an important one to many people now and in the future.
Let’s look at the current state of the Old-Age and Survivors Insurance (OASI) Trust Fund (the technical name of the fund that provides retirement income). This information comes from the 2017 Annual Report from the Social Security and Medicare Boards of Trustees (you can find a copy of the report here.) The report is 269 pages in length so you might want to read a summary. Key points from the report:
- Social Security’s total income (revenue plus trust investment income) is projected to exceed its total cost through 2021
- However, the trust fund will be depleted in 2034 (meaning outgoing payments will exceed incoming revenue)
- Thereafter, scheduled tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through 2091 (that’s as far as the report looks out).
This is scary stuff, especially if you’re counting on Social Security to pay a major portion of your retirement income. What are the options to fix Social Security so that it’s around when you need it?
Keep in mind that the solutions to the Social Security problem are political first. That is, politicians in Washington need to agree on what to do and that is a tall order. There are few topics more emotional and loaded than Social Security so coming to an agreement about what to do will not be easy.
Next time: We’ll examine the options to fix Social Security and answer the question if it will be around when you need it.