Will Social Security Last Another 80 Years?
By: John P. Napolitano, CFP®, CPA, PFS, MST, RLP®
First of all, Happy Birthday Social Security. Many thank you monthly as you have unintentionally become their main source of income. Social security (SS) was created to be a retirement and disability supplement for those who pay into the system. The name wasn’t made up, it was designed to provide some sort of financial social security for the masses.
Will it last another 80 years? In its current form, no way. The date when they are targeted to run out of money is widely publicized. But it may not be as gloomy as it sounds.
When SS was founded, the normal retirement date was equal or greater to the average life expectancy for US citizens. Today, what is considered the normal retirement date of between 65 and 67 is far shorter than the average life expectancy. Therefore, the payments are far greater and lasting way longer than the founding fathers intended. As a result, expect to see changes in the social security system as it gets closer to its insolvency date, and likely far sooner.
Amongst the possibilities to restore solvency to the system are means testing for benefits, delaying the age of normal retirement, upping the current SS tax rate, raising the limits for when contributions stop ($118,500 is subject to SS taxes in 2015).
Frankly, it isn’t rocket science and our legislators should be able to fix the issue. It will take cooperation and common sense.
You can learn more about your retirement and benefits through My Social Security : a suite of services, the retirement estimator, and the online retirement application.