Nov 1, 2019 3 min read

According to the 2019 Wells Fargo Retirement study, 71% of Americans are afraid that Social Security will not be available to them. People are hearing reports of SS recipients receiving only 78% of their promised benefits. This number is calculated by estimating the revenues going into the trust fund compared with the expected benefits being paid out.

This is expected to be the first year when less will be paid into the trust fund than paid out.

When SS was created, it was a program in which current workers paid the benefit to retired workers. This worked great when all of the baby boomers were working. Now 10,000 boomers turn 65 every day.

Today, this is putting a huge strain on the available resources. Original SS covered only the working spouse, who had to be 65. Because many males at that time did not live much longer, funding was easy.

The trust fund is projected to run out of money in 16 years. Just about all politicians will tell us they will protect our Social Security. They are not protecting SS if they don’t make some changes. It will run out of money if they don’t do anything.

This issue could be solved quickly if they quit playing political football. It would not be an extreme hardship to anyone.

There are not that many variables to adjust and they do not have to be too painful for anyone. For retirees, there will probably be two changes: likely a change in the index that is used for cost-of-living adjustments and maybe making all benefits taxable over a certain income level. It is more important to receive your benefit for the rest of your life and these will be a small price to pay.

For current workers, the taxes will most likely need to be increased a little bit that is paid. There will probably be some increase in age to collect benefits. People are living longer due to improvements in the health care field, better environmental conditions and an increased awareness of healthier choices we can make. Currently, 53,000 people in the United States are 100 or older.

This is not the first time we faced these issues. In 1985, SS was going to go broke. In 1983, President Reagan and House Speaker Tip O’Neal adjusted many of these same variables, and that has kept the program running for 52 years. The sooner the problem gets fixed, the changes can be smaller and shared by more people. Politicians will fix the problem because none of them can get re-elected if they don’t. Most changes will be phased in over time.

Recently, it was announced that benefits will increase 1.6% in 2020. Social Security is one of the few retirement assets with a cost-of-living increase. At a time when many people do receive pensions, it is more important than ever. Let’s get this problem resolved now for the good of everyone.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, email Rick Shrum at rshrum@observer-reporter.com.