Social Security Trustees’ Annual Report Sounds Warning

9:00 pm Estate Planning, Retirement Planning

social security check e1335301183270 Social Security Trustees’ Annual Report Sounds WarningThe Social Security Trustees’ annual report released yesterday did not contain much good news for the those counting on Social Security benefits to live comfortably in retirement.  According to the report, the fund will be unable to pay full benefits beginning in 2033 – three years sooner than was projected in the same report last year.

For Medicare, the news was more dire: Medicare’s Hospital Insurance Trust Fund will have sufficient resources to maintain full benefits only until 2024, just a dozen years from now.

Social Security Administration Commissioner Michael Astrue was quick to point out that, “exhaustion is an actuarial term of art and it does not mean there will be no money left to pay any benefits. Come 2033, if Congress does nothing, there will be sufficient assets to pay 75% of the benefits.’’

Projections are based on economic assumptions and actuarial data, and are by no means cast in stone – however, what experts have gleaned from the report is that the funding shortfalls are real and measures need to be taken sooner rather than later to address them.

The bi-partisan solution from the Bowles-Simpson Commission in 2010 recommended that closing the gap could be achieved through increasing the amount of wages subject to Social Security tax, gradually increasing the age of full retirement for those born after 1960, cutting the annual cost of living increase to retirees by about 0.3 percentage points annually, and providing fewer benefits to the well-to-do.

While waiting for Congress to take action, the wise pre-retiree should take action by consulting with an estate planning attorney to develop a personal plan for a secure retirement, regardless of the presence – or absence – of Social Security benefits.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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