Social Security Will Run Out by 2034 – Here’s the Solution

Social Security Will Run Out by 2034 – Here’s the Solution

Steve McDonaldBy Steve McDonald
Bond Strategist

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SLAP IN THE FACE AWARD
Here’s a slap that just flips my switch year after year. It’s about the annual Social Security Trustees Report.

The 2018 report about the health of Social Security is out, and there’s really no new information in it. I don’t understand why they even continue to print a new one every year.

So little has changed; they should just reissue the old one.

According to the report, the trust fund will be depleted by 2034. Nothing new there – we’ve known that for decades.

There’s a 2.84% deficit between what we’re paying now and what we need to pay to fund our benefits for 75 more years. Same old, same old.

And absolutely nothing is being done about it… nothing. No news there either.

As far as I’m aware, we’ve been seeing the same deficit numbers since the ’80s, and our fearless leaders in Washington, D.C., have been sweeping it under the rug for just as many decades.

And it’s really quite simple to fix. We need to increase the percentage of our payroll deductions across the board and increase the maximum amount of income that can be taxed.

Right now, the employee and employer both contribute 6.2% to the fund. And the maximum income that’s taxed is $128,700.

If we continue to do nothing, we face a 25% reduction in benefits in 2034.

We can either increase the tax rate or increase how much income we’re taxing. A combination of both would also be fine.

Or, as the millionaire boys club in Congress has suggested, we can reduce benefits.

That would go over in a big way!

The average check paid to retirees is $1,404 a month, and the average person claiming benefits receives only 13 checks. The boys on Capitol Hill think that’s too much.

Come on, guys! Get your heads out of the cherry-paneled rooms.

Based on the latest report, if we bump up the payroll deduction by just 1.42% for both the employer and employee, we could fund benefits through 2092.

The average income in America is $59,358. That would be an increase of $16.86 for each side – employer and employee – per week for a 50-week work year.

At the maximum taxed income of $128,700, that’d be a whopping $36 per week for the employee.

Is it just me or does this seem too simple?

When you consider the aging trend of our population, we don’t have a choice. Something has to be done… and soon.

But as long as Washington’s only focus is on destroying the other party, expect more do-nothing activity from the 20001 ZIP code.

Maybe networks like Fox News and CNN could spend just one minute a week demanding as much attention be paid to this as the “red vs. blue” stupidity they seem fixated on.

Good investing,

Steve

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