Social Security has been one topic that is gaining traction lately, and as always, not for good reasons. The majority of workers in the United States depend on their Social Security income to facilitate funding their retirement. Sadly though, a Gobankingrates.com report suggests that the trust fund for this is likely to be exhausted by 2035. That said, many are musing what the government program would look like by then?
Social Security running dry in 2035
Suppose the Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund’s 2020 annual report is anything to go by. In that case, Social Security’s income is projected to exceed its expenses this year. The report also forecasted that by 2035, the reserves would be fully depleted, adding that annual taxes are said to cover just about three-quarters of the benefits annually after that.
Further, the report also revealed that if no changes are being made to answer the trust fund shortcoming, a 23 percent reduction in benefits will likely happen. If that’s the case, folks relying on the program by that year should brace themselves for such a worst-case scenario.
Social Security shortfall unlikely
However, some pundits may well seem to debunk this. Retirement Capital Planners’ retirement planner and Social Security expert Joseph E. Roseman Jr. believes that the ramifications of such an event would be beyond traumatic for everyone in the U.S. and added that the government would have a national disaster in their hands if that happens.
Roseman further explains that it’s probable that Congress would intervene in this before 2035 to avoid benefit cuts. Another Social Security expert from Investment News – Mary Beth Franklin – echoed the same sentiment. She said that as pensions are disappearing, people are relying more on Social Security.
Due to Social Security’s popularity, lawmakers don’t want to make tweaks for existing retirees and will potentially have to look for other avenues to resolve the trust fund shortfall.
Just in case this thing happens in 2035, one should be well-prepared if their benefits get screwed. Here are some options to alleviate the effects of a cut benefit:
- Working longer hours to offset any reduction in Social Security benefits
- Increasing 401 (k) contributions
- Boosting one’s emergency fund
- Checking pension status
- Adjusting investment strategy
- Saving outside of one’s retirement plan
Roseman’s view on this is that the shortfall on the Social Security system can be resolved easily, though according to him, it’s quite difficult to make the needed changes. He went on to say that nobody wants to compromise.