PlanGap preserves retirement promises and income
We develop PlanGap insurance products to keep your plan on track and allow you to sleep better at night.
You worked hard for your retirement plan
But looming Social Security cuts could derail much of what you’ve set out to achieve.
Did you know this disclaimer is on your Social Security benefits statement?
*Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.
View your personal statement
With your My Social Security account, you can receive personalized estimates of future benefits based on your real earnings, see your latest statement, and review your earnings history.
Go to SSA.gov
Is the risk of Social Security reduction real?
What do the experts say?
Starting in 2020, the Social Security Administration started paying out more money in benefits than total revenue received. Effectively, the Trust Fund is beginning to shrink.
Many people and sources have opinions on what the future may hold for Social Security. However, all seem to come to the same conclusion: If changes are not enacted by Congress, Social Security retirement beneficiaries will not receive all of the benefits that have been promised.
The U.S. Government Accountability Office, Penn Wharton Budget Model, U.S. Securities and Exchange Commission, and Congressional Research Service, all indicate a reduction in Social Security benefits in the next 10-15 years would be necessary, if changes are not made to current law.
The Nation’s Retirement System: What Does the GAO Say?
Known as the “Congressional Watchdog,” the Government Accountability Office (GAO) is a legislative branch agency that audits and evaluates the U.S. Congress. In its most recent 2019 evaluation of U.S. retirement security, the GAO’s research continues to find that several retirement-related challenges have yet to be addressed by Congress, such as growing debt, healthcare costs, the complexities related to managing employer-sponsored retirement plans, and the fact that Baby Boomers are now beginning to retire en masse. They conclude that combined with increased longevity, these challenges can put individuals at greater risk of outliving their savings and that fiscal pressures on government programs, such as Social Security, will likely grow.
Penn Wharton Budget Model: Social Security Projections
The Penn Wharton Budget Model is an objective, nonpartisan analysis tool, which allows users to simulate the economic impact of national budget policies. According the the latest estimates, prior to Trust Fund depletion, scheduled and payable Social Security benefits are, of course, the same. After Trust Fund depletion, payable benefits fall to between 25 and 30 percent below scheduled benefits, and this difference grows over time.
The New American Dream: Retirement Security
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the federal government responsible for enforcing securities laws and for regulating the securities industry (such as as stock and option exchanges). The SEC finds that, given the limited availability of employer-sponsored pensions and Social Security’s declining financial health, we are headed toward a world in which personal savings may be the most significant source of income for retirees.
Congressional Research Service: What Would Happen if
the Social Security Trust Funds Ran Out?
The Congressional Research Service (CRS), an agency within the Library of Congress, has been informing legislative debate since 1914. The CRS works exclusively for the United States Congress, providing policy and legal analysis that is authoritative, objective and nonpartisan to ensure that members of Congress have access to the nation’s best thinking. In their latest review of the issues revolving around U.S. retirement security and the state of Social Security, the CRS suggests that in order to maintain financial balance after the projected Social Security trust fund insolvency in 2035, Americans could expect substantial reductions in Social Security benefits, substantial increases in taxes, or some combination of the two.
What is the impact of COVID-19 on the Social Security Trust Fund?
COVID-19 has most likely changed how we will live our lives forever. The pandemic has increased strain on the long-term solvency of the Social Security program due to the following consequences:
- Lower payroll tax revenue due to high unemployment
- Extended low interest rate environment reduces interest income
- Concern over early election of benefits due to job market uncertainty
The Social Security Administration acknowledges that the 2020 Annual Report from the Social Security Board of Trustees does not include factors related to the coronavirus. At the time of the report, the agency projected that funds would be depleted by 2035 and only 79% of promised benefits may be payable. Experts believe that COVID-19 will have damaging effects to future projections of the OASI Trust Fund solvency.
Due to the information above, ask your financial advisor how the estimated reduction could affect your retirement plan.
Learn more about COVID-19’s impact on your future
Social Security Benefit Reduction in the News
As Social Security benefit cuts become more likely, it’s important to know why, when, and how to be prepared.
Social Security Must Reduce Benefits in 2034 if Reforms Aren’t Made
For the first time since 1982 Social Security’s costs will exceed its payroll income plus interest from the $2.9 trillion trust funds.
Status of the Social Security Program
Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. Here is a summary of the 2020 annual report.
How Much Longer Will Social Security Be Around?
While the boomers are swelling the ranks of retirees, lower birth rates in subsequent generations mean there are fewer workers paying into Social Security.