Plan like Social Security won't be there, expert says as insolvency looms

Plan like Social Security won’t be there, expert says as insolvency looms

These days, the future of Social Security is looking far from secure.

A key fund that supports the lifeline for retirees is now expected to run short on cash by 2033, a year sooner than before. Medicare isn’t far behind.

The outlook is so grim that the cofounder of a popular wealth management service is telling all of his clients under 40 to prepare as if Social Security won’t be there at all.

“I call it the YOYO economy — You’re On Your Own,” says Brent Weiss of Facet Wealth.

If you’re already struggling to save or pay down debt, Weiss says, the forecast shouldn’t drive you to despair. Instead, it should inspire you to take control of your own retirement.

Pandemic speeds up the timeline

OSORIOartist / Shutterstock

The Treasury Department oversees two funds that provide income for the Social Security program: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund.

While the funds going insolvent has been a concern for years, the pandemic has made the situation worse. Social Security is financed through a dedicated payroll tax, and a steep drop in employment has shrunk the government’s revenue.

After 2033, the Old-Age and Survivors Insurance Trust Fund will only be able to pay out 76% of the scheduled retirement benefits, based on the revenue it expects to bring in.

This year’s status report from the Treasury also says the Disability Insurance Trust Fund is expected to run out by 2057 — eight years sooner than previously estimated — at which point it will only be able to pay 91% of benefits.

To close the gap for the two funds, the government would either need to hike the payroll tax by 3.36 percentage points or reduce annual spending by 21%, according to the report.

Medicare’s future looks uncertain, too

Drazen Zigic / Shutterstock

While not as dire as the projections for Social Security, decreased tax revenue will also have an impact on what the Medicare program will be able to afford.

The insolvency timeline hasn’t sped up yet, as Medicare’s expenses dropped during the pandemic while Americans avoided elective care.

This year’s projection anticipates that Medicare will run out of the cash to cover all of its bills under Part A — which covers care at a hospital, skilled nursing facility or nursing home as well as home health services — in 2026.

To close the gap, Medicare would either need to increase its payroll tax rate by about 0.77 percentage points or reduce its spending by 16% each year, according to the report.

Those estimates would go out the window if Congress changes or extends the government’s current policies — meaning the outlook could be more grim.

That said, the Democrats’ planned expansion of Medicare coverage to include vision, dental and hearing care won’t impact the trust fund’s solvency because Part B and D get their funding from different sources, like premiums paid by policyholders.

Make a plan as soon as possible

Johnstocker Production / Shutterstock

While Weiss sees the funds’ depletion as “likely an inevitability,” the federal government has a number of options to right the course. In addition to raising taxes or cutting benefits, it could raise the retirement age, cut the annual cost-of-living adjustment or make other tax changes.

Whatever the government does or doesn’t do in response to the crisis, Weiss says not to sit around worrying.

“I look at it as an opportunity, especially for younger individuals, to develop a financial plan to create their own financial independence,” he says.

Americans should make the most of the years they have before retirement by maxing out their employer-matching 401(k) contributions, which he describes as “the closest thing he’s seen to free money.”

Weiss also says to set aside money in a health savings account on top of finding affordable health insurance so you’ll have money to fall back on to cover medical bills.

“Yes, we should be concerned that there is an inevitable change coming to this landscape,” says Weiss. “The good news is that time is still on our side and we can make smart, informed decisions with our money today to hopefully help us live well in retirement.”

How to find the cash you need for retirement

ESB Professional / Shutterstock

Weiss says you don’t need to make large, sweeping changes to start effectively saving for retirement. He suggests taking a 1% approach: Begin by putting aside 1% of your income and slowly adding on another percentage point every six to 12 months.

“Most people will tell you to make very big changes in your life to ultimately retire well, but I think it’s actually about these incremental, imperfect, but implementable changes you can make,” he says.

If you’re not sure how much you need to save or where to start, knowledgeable and professional advisers are more affordable and accessible than they’ve ever been.

Once you have a clear idea of your end goals, look into some pain-free ways to trim your budget and free up more cash for retirement. One easy win: downloading a free browser extension that automatically scours the internet for better deals or coupons every time you shop online.

Finally, to make saving as simple as possible, consider automating your plan. With one popular investing app, you can grow your savings by automatically investing with your “spare change” from everyday purchases.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Internet Explorer Channel Network
News Related

OTHER NEWS

Roy Keane's bold prediction coming true as Sir Alex Ferguson visits Manchester United training

Here are your Wednesday morning Manchester United headlines on October 27. Mystic Roy Keane Not to be undone by his former Manchester United midfield partner, Roy Keane’s words in 2019 ... Read more »

Sale of Tasmanian salmon farmer ‘a certainty' but opponents remain bitterly disappointed

The $500m takeover bid of Tasmanian salmon farmer Huon by Brazilian meat processing giant JBS is a “certainty’” with a key shareholder vote on Friday expected to approve the deal. ... Read more »

Bill Murray hints he may be joining the Marvel Cinematic Universe in 'Ant-Man and the Wasp: Quantumania'

© Provided by INSIDER Bill Murray walks a red carpet during the 14th Rome Film Festival on October 19, 2019 in Rome, Italy. Photo by Vittorio Zunino Celotto/Getty Images for ... Read more »

Cher was originally considered for the role which went to Aaliyah in the 2002 film Queen of the Damned

Cher was initially considered for the role the late Aaliyah played as Queen Akasha in the 2002 film Queen of the Damned. Director Michael Rymer, 58, opened up about the ... Read more »

Dubai property of the week: Dh14m One at Palm Jumeirah apartment has Miami vibes

© Provided by The National The apartment has great views of the ocean and Dubai Marina skyline There is no doubt that the UAE is home to some spectacular properties. ... Read more »

Floods prompt evacuation in Davao City, Cebu Province, Aklan amid heavy rains

© Unang Balita Flood in Sogod, Cebu. Unang Balita Over a thousand of residents were evacuated from their homes due to the flooding caused by the heavy rains in Cebu ... Read more »

Karnataka: Two suspected cases of AY.4.2 COVID-19 variant identified in Bengaluru

© Provided by Zee News Bengaluru: Two suspected cases of AY.4.2 variant of the novel coronavirus have been identified and the samples have been sent to a laboratory for genome ... Read more »

Will He, Won't He? Capt Amarinder Singh May Bid Final Adieu to Congress Today, Launch New Party

© Provided by News18 Will He, Won’t He? Capt Amarinder Singh May Bid Final Adieu to Congress Today, Launch New Party A bitter feud for power, resignation of an old ... Read more »

NIA verdict likely today on 2013 serial blasts at Narendra Modi rally in Patna

© Provided by Hindustan Times Prime Minister Narendra Modi addresses during the inauguration of the medical colleges, in Siddharthnagar on Monday. The NIA is expected to give a verdict on ... Read more »

IIM CAT Admit Card 2021 to release today, check how to download at iimcat.ac.in

© Provided by Zee News New Delhi: Indian Institute of Management Common Admission Test (IIM CAT) Admit Card 2021 will be released on Wednesday (October 27). Candidates can download the ... Read more »

RPSC prelims 2021: Mobile internet, SMS service suspended in Jaipur for 4 hours

The Rajasthan government has suspended mobile internet, bulk SMS and access to social media services in Jaipur in the wake of Public Service Commission (RPSC) exam. The RPSC RAS preliminary ... Read more »

Robby, a line-painting robot, blazes trail on UBC sports fields

A little robot named Robby is blazing a trail — literally — on athletic fields at the University of British Columbia in Vancouver. © Paul Joseph/UBC Robby is an autonomous ... Read more »

A local's guide to Glasgow: five great things to do

Artist Annie Hutchinson has fallen in love with Glasgow since moving there to live and work three years ago. Food The West End is one of the glitziest bits of ... Read more »

Video shows raw sewage being pumped into harbour in Hampshire for 49 hours

Untreated sewage being released in Langstone Harbour, Hampshire Read more »

Delta Goodrem turns heads in an elegant green dress with a cheeky backless detail as she attends a Melbourne Cup event

All eyes were on Delta Goodrem as she arrived at an exclusive Melbourne Cup event hosted by Lexus in Sydney on Wednesday. The 36-year-old singer looked effortlessly chic in a sage green ... Read more »

Felony charges against homeless Pennsylvania man who faced up to seven years in jail for underpaying by 43 cents for a bottle of Mountain Dew, are dropped

In August, Joseph Sobolewski, 38, went into an Exxon and saw a sign advertising two 20-ounce Mountain Dew bottles for $3. He paid $2 for one The single bottle cost $2.29, so including tax, he owed the store 43 centsThe store employee called police, who found and arrested Sobolewski on a felony charge. A judge ordered him held on a $50,000 cash-only bondSobolewski was held in the Dauphin County prison for seven days before his public defender successfully argued for his release. He faced up to seven years 'My wife and I are currently homeless. My wife is a diabetic. I take any and all odd jobs that come my way,' he wrote in a GoFundMe he started  Read more »

Police reveal WHY they searched Cleo Smith's parents house - spending seven hours there and leaving with bags of evidence

Cleo Smith's family home in Carnarvon was searched for seven hours on TuesdayActing police commissioner said it is 'standard practice' as part of investigationCleo was last seen in early hours of October 16 at the Blowholes campsiteHer stepdad Jake Gliddon returned to the home to let forensic officers inside Her parents are not considered suspects in the mysterious disappearance  Read more »

Man arrested for threatening Rep. Matt Gaetz

A California man was arrested for threatening Rep. Matt Gaetz in January, 2021. picture alliance / Consolidated A California man was busted for threatening to kill Rep. Matt Gaetz and ... Read more »

Knicks will win many games if they play like they did in this one

The shooting? That part will come and that part will go. We saw that on stark display the last two Knicks games, both against the Magic. In Orlando, they were ... Read more »

State trooper, canine partner find woman along I-495 after she fled from an ambulance

© Submitted State Trooper Ken Hanchett and his canine partner, Orry, were credited with finding a woman who fled from an ambulance on a ramp to I-495 on Tuesday in ... Read more »

Gunman in Idaho shopping mall shooting spree dies of injuries

Law enforcement officers collect evidence near the scene of a shooting at the Boise Towne Square shopping mall in Boise, Idaho By Steve Gorman (Reuters) – A man who opened ... Read more »

First Drive: Is the third-generation Audi RS 3 the best yet?

What is it? (Audi) The hot hatch market has evolved considerably in the past decade. Not too long ago, the idea of more than 300bhp in a compact car was ... Read more »

Bigg Boss 15: Jay Bhanushali was being stupid in his stand over the prize money, feel fans — view poll results

© Provided by BollywoodLife.com Bigg Boss 15 is turning out to be an interesting season. One of the contestants who has left people with mixed feelings is Jay Bhanushali. Honestly, ... Read more »

Kajal Aggarwal's birthday post for her 4 year old nephew proves she will make the coolest mom

© Provided by Pinkvilla Kajal Aggarwal’s nephew Ishaan Valecha turns 4 today, October 27. Sharing a priceless photo of her playing chess and giving high-five to Ishaan, Kajal wrote, “Happiest ... Read more »

Kathryn Hahn's Joan Rivers biopic The Comeback Girl cancelled

© Provided by Cover Media Kathryn Hahn A limited series starring Kathryn Hahn as Joan Rivers has been cancelled. Last month, executives at Warner Bros. Television confirmed that the WandaVision ... Read more »

Two New Stars Coming To Chicago Med

YouTube/NBC While its sister show “Chicago Fire” has said goodbye to fan-favorite Matthew Casey (Jesse Spencer), it looks like the cast of “Chicago Med” may be getting a little larger. ... Read more »

Vaccination of all minors aged 12 to 17 to begin as early as November 3

Vaccine czar Sec. Carlito Galvez at Oct. 19, 2021 briefing The vaccination of all minors aged 12 to 17 years old nationwide against COVID-19 may start as early as November ... Read more »

NHS Test and Trace was £37 billion flop that failed to stop Covid spreading, MPs admit

TAXPAYERS have wasted an “eye-watering” £37 billion on NHS Test and Trace, according to a new report. The report by the Public Accounts Committee (PAC) found the vast sum was ... Read more »

Bill Murray Just Finished Shooting A Marvel Movie And It May Be His Last

BAKOUNINE/Shutterstock Since its inception in 2008, the Marvel Cinematic Universe has grown to have a place for as many members of the Marvel Comics roster as possible. From Iron Man ... Read more »

Horrifying story of lioness driven ‘insane' and left scarred by banging her head against cage in zoo from hell

AN abandoned lioness was driven “insane” after she and six other animals were left to rot at a zoo in Armenia. Three lions, two bears and two guinea pigs were ... Read more »

Rust Armorer Enraged Nic Cage With 'Rookie' Behavior On Set

Featureflash Photo Agency/Shutterstock A lot of uncertainty still surrounds the accidental shooting and death of cinematographer Halyna Hutchins on the set of the Alec Baldwin film “Rust.” It’s a very important ... Read more »

'Sorry to see her go': Great British Bake Off viewers are left disheartened as Amanda is sent home after she and George struggled with pastry challenge

Great British Bake Off viewers were left disheartened to see Amanda become the latest baker sent home on Tuesday’s episode. This week’s pastry challenge proved a difficult one for the ... Read more »

'Have you seen Space Jam 2?': Squid Game creator Hwang Dong-hyuk HITS BACK at LeBron James after the NBA star said he 'didn't like' the Netflix series' ending

LeBron James was one of the over 111million viewers that helped Squid Game become Netflix’s ‘biggest series ever to launch.’ But the 36-year-old NBA star recently revealed during a press conference with Lakers teammate ... Read more »

Corona-Strategin des Ex-Präsidenten packt aus: Trump hätte Tod von 130'000 Amerikanern vermeiden können

Trumps Corona-Strategin Deborah Birx schiesst gegen den Ex-Präsidenten. Hätte er auf die Empfehlungen und Strategien seines Teams gehört, wären mindestens 130’000 Corona-Tote nie verstorben. © imago images/ZUMA Wire Trump hätte ... Read more »

PICTURED: Heroic Army veteran, 26, working as a security guard when she died trying to stop Idaho mall gunman: Shooter dies in hospital while his second victim is revealed as 49-year-old Boise man

Police identified two victims of Monday's shooting at Boise Town Square as Jo Acker, 26, and Roberto Padilla Arguelles, 49The suspect was also named as 27-year-old Jacob BergquistCops said that he died late Tuesday morning from injuries he sustained during a police shootoutAcker was a transgender woman working as a security guard at the mall when she tried to stop Bergquist and was fatally shotArguelles lived in Rupert, Idaho, and died from his injuries at the hospitalFive others were injured in the shooting, which happened at Boise's largest mallThe police or coroner's office have not yet to release the names of the other victims and the coroner said Bergquist's cause of death was still pending Read more »

iPhone-Hersteller produziert eigene Autos – so sehen sie aus

© Foxconn Unter dem Brand Foxtron will Foxconn ins E-Auto-Geschäft einsteigen, etwa mit dem kompakten Model C. Kurz nach der Ankündigung ehrgeiziger Pläne zeigt der taiwanesische Elektronik-Hersteller Foxconn nun seine ... Read more »

Mum of triplet boys left with £500 of girls clothing after scan mix-up

A FIRST-time mum of triplet boys has been left with £500 of girlie clothing after five sex scan mix-ups. Gina Dewdney, 34, was elated when she was repeatedly told that ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic