Don’t Let This Social Security Myth Worry You

Social Security

Don’t Let This Social Security Myth Worry You

Posted by COTO Insurance & Financial Services
3 months ago | May 27, 2019

Maybe you heard it on the evening news, or you read a scary headline on Facebook. Perhaps you’ve been subjected to water cooler gossip at work, or your cousin brought up the subject at a recent family gathering. Whatever the source of the information, you might have heard that Social Security is “running out of money” and that your future benefits are about to disappear.

Let’s go ahead and clear up this issue right away: This is a myth! Social Security is not running out of money, and your benefits are not in grave danger.

So, why are people spreading this rumor? Like most frightening urban legends, there is some basis in fact, but the official story has been distorted by a combination of fear and misunderstanding of the details.

Most of the Social Security benefits paid to beneficiaries comes from taxes paid into the system each year. However, incoming taxes don’t quite cover the budget for outgoing benefits, so the Administration makes up the difference by pulling from two trust funds: The Old-Age and Survivors Insurance and the Disability Insurance trust funds cover that gap in the budget. However, those funds are indeed running dry, and will be exhausted by about 2035.

Therefore, all of our Social Security benefits will not “disappear”. We will, however, need to deal with a gap in the budget. What that means is that Social Security will be able to cover 70-80 percent of benefits due. Currently we aren’t sure of how the remaining balance will be addressed.

Politicians and policymakers have proposed a variety of solutions to this problem. Some say we should raise the minimum age for claiming Social Security retirement benefits. Others want to raise taxes on workers. Several other potential solutions have also been debated.

Yes, this is a problem that should be addressed, especially as the Baby Boomer generation continues to retire. But we have confidence that our lawmakers understand the importance of Social Security, and will be working on solutions well in advance of 2035.

In the meantime, try not to let this myth concern you. If you’re worried about retirement income planning in general, do give us a call and we can schedule an appointment to discuss your budget concerns and future income potential.

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