Dear Rusty: I’m always hearing rumors of Social Security imploding – of people my age getting benefits but not the younger as they have time to do something else. I wonder if I file in December for 50% of my spouse’s benefit, and later, before I turn 70 and change to my own benefits, if SS goes bust will I lose what I would have been able to claim under myself? I understand that you would only be guessing to answer that. From what I’ve read, it seems that 20% reduction will be necessary across the board. I do not trust politicians who love to play Santa to get reelected. Signed: Untrusting Senior
Dear Untrusting Senior: As of right now, Social Security (SS) has about $2.9 trillion in reserves in its Trust Fund. Beginning probably in 2020, SS income will be less than needed to pay all benefits, and money will start to be withdrawn from the Trust Fund to meet benefit obligations. Current projections are that the Trust Fund reserves are sufficient to pay 100% of benefit obligations until 2035, at which time SS will only be able to pay out as much money as it brings in. According to projections, that would result in about a 21% cut in benefits for all beneficiaries. But those dire predictions are only valid if Congress does nothing to resolve Social Security’s cash flow deficit expected to start in 2020.
The solutions for Social Security’s financial issues are very well known to Congress. What’s missing is a bipartisan agreement on the best way to resolve it. One side of the aisle wants to simply raise Social Security taxes (remove payroll caps and raise FICA contributions), while the other side prefers future program adjustments which deal with the reality that people are living much longer today than they did when SS was first enacted. Most pundits believe that Congress will eventually reach a compromise before the Trust Fund is depleted in 2035 requiring benefit cuts. After all, what politician who wishes to stay in Congress would want to be associated with reducing Social Security benefits for the very large and voting senior citizenry?
To get to your specific question: There is no real danger of SS going “bust,” as in not being able to pay any benefits at all, so you’ll never “lose what I would have been able to claim under myself.” The worst-case scenario is that your age 70 benefit (which will be about 32% more than your age 66 benefit) might be reduced, but it would never be totally eliminated. The best-case scenario is that Congress puts the current vitriolic atmosphere aside and does their job to fix the problem before it’s a crisis.
The last time Social Security had a crisis of this nature was in 1983, and the Democratic-controlled Congress and the Reagan Administration worked together to enact a fix which lasted for decades (until now). It’s my sincere hope, and indeed my expectation, that a similar bipartisan effort will eventually take place to resolve Social Security’s financial issues for many decades to come. The Association of Mature American Citizens (AMAC) has developed a common-sense Social Security Guarantee proposal which has been presented to multiple Congressional representatives for consideration, and which would solve Social Security’s financial issues for generations. If you’d like to see that proposal, feel free to go to this link: https://amac.us/social-security/. Will Congress act on this any time soon? I’m afraid that’s impossible to predict, but if history offers any insight it’s that they will probably act only when the crisis can no longer be ignored.
Russell Gloor is an Association of Mature American Citizens certified social security advisor. To submit a question, visit amacfoundation.org/programs/social-security-advisory or email firstname.lastname@example.org.