Looking at the Options to Fund the Social Security Shortfall

socialsecurityoptions

 

 

How Would You Strengthen Social Security?

 

 

The American Association of Retired Persons (AARP) champions positive social change and recently sponsored a TownHall meeting in Alexandria, VA that was designed to address the challenges of Social Security in the next twenty years.  According to the AARP (www.aarp.org) if the U.S. Treasury repays the money it has borrowed from Social Security, by 2033 Social Security can pay 75 percent of benefits, and by 2086 Social Security can pay 73 percent of benefits.  Overall, after 2033 Social Security can pay about 75 percent of benefits for the next 75 years (or more) if no changes are made. This indicates a 25 percent shortfall.

This pending shortfall has made many individuals nervous. Some people contemplate filing for Social Security benefits early to make certain they are enrolled before Social Security “goes broke”.  You may ask yourself why this problem now? It seems that longevity and fewer workers entering the workforce have had a large impact.

  •  Increased longevity: In 1940, a 65-year-old could expect to live an additional 12 or 13 years.  Today a 65-year-old can expect to live another 20 years. This means that more individuals are collecting benefits, for a longer period of time.  The AARP (http://www.aarp.org/politics-society/advocacy/info-04-2012/youve-earned-a-say.html) reports that the number of Social Security beneficiaries is expected to rise from 57 million in 2012 to nearly 90 million in 2033.
  •  A lower worker-to-beneficiary ratio: Another AARP statistic indicates that the drop in birthrates and the increase in life expectancies have reduced the number of workers per beneficiary and the trend is expected to continue. Today there are 2.8 workers for each person who receives Social Security benefits. By 2033, the ratio will be 2.1 workers for each beneficiary.

It is important to keep in mind that the expected 25 percent shortfall will not go away unless something changes. The AARP lists about a dozen options that are currently being discussed in Congress.  Which options do you agree with? Which options do you oppose? What are you going to do about it? Use the AARP Strenghten Social Security Tool located at http://www.aarp.org/work/social-security/info-06-2012/strengthen-social-security-youve-earned-a-say.html?intcmp=ADV-YEAS-SSST-BTN-TOP to see if your choices can fill the gap.

About ksindell

Kathleen Sindell, Ph.D. is the author of numerous academic, popular, and professional finance articles, Web sites, proposals, and books. This includes the bestselling reference book, "Investing Online for Dummies, Eds 1-5" (listed for two consecutive years on the Wall Street Journal's Bestselling Business Book List). Her most recent book "Social Security: Maximize your Benefits" has been listed in Amazon's Top 100 Bestselling Retirement Planning Books. It is important to note that "Social Security: Maximize Your Benefits, 2nd Edition" was just released. Sindell has an in-depth understanding of the financial services industry and has held Series 7, 63, and 65 licenses. Dr. Sindell is regularly tapped as a financial services expert on ABC World News, The Nightly Business Report, and at popular online and print outlets. Kathleen Sindell, Ph.D. is a member of the Board of Directors for the Financial Planning Association, National Capital Area (FPA NCA), is on the Editorial Advisory Panel of the Journal of Financial Planning, and is Co-Chair of the Metro Washington Financial Planning Day. Sindell is a Course Chair II, CFP Program Academic Officer, and adjunct full-professor at the University of Maryland, UMUC, School of Undergraduate Studies. Contact Information: ksindell@kathleensindell.com or 703-299-1700
This entry was posted in Blog Writing. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.