• Eric Walter, CFP®

Social (In)Security

In the 2019 Gallup poll on Social Security, 67% of Americans listed Social Security as one of their top worries with only 33% of non-retired adults expecting it to be a major source of retirement income. When working on Financial Plans, client discussions most often include benefit amount and claiming strategy; however, sometimes we address the more fundamental concern of sustainability.  Even if you are already claiming, you may have concerns.

This concern is further illustrated by the disclaimer on the current Social Security statement. “Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.” While this creates a distressing headline, Social Security has never missed a payment and had reserves of $2.9 trillion at the end of 2018. Nevertheless, changes will have to be made at the congressional level.

Earlier this year, a bill (H.R. 860) was introduced in the house to address this long-term shortfall by gradually increasing payroll and self-employment taxes. Income above $400,000 would also be included in calculations. Currently, income above $132,900, indexed each year, is not subject to the Social Security portion of taxes. This would create revenue and additional planning opportunities. The bill also updates the method for the cost-of-living adjustment (COLA) and the calculation for benefits, increasing benefits across the board. This bill may not become law but with 210 co-sponsors it demonstrates that a fix is likely on the horizon.

If you haven’t already, we recommend setting up a mySocialSecurity account at www.ssa.gov/myaccount. If you receive benefits or have Medicare, you can check your benefit and payment information, update direct deposit, and get replacement tax documents. If you are not yet receiving benefits, the homepage gives you a snapshot of your estimated benefit at full retirement age (FRA) and your last reported earnings, as well as, the ability to print your full statement, view your earnings record, and estimate benefits. As situations change, Susan and John are here to discuss any questions or concerns you have.

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