The future of Social Security is uncertain, and while this is not news or the first time it has occurred, it appears to be the first time when the writing is so apparent and no remedy is in sight. The country is deeply divided, and offered answers appear to be rejected by the other party as rapidly as they emerge, with no apparent consensus on potential alternatives.
The problem of Social Security
Social Security faces a shortfall; the organization is likely to owe more in planned benefits than it earns in payroll tax money when baby boomers retire in large numbers. This would normally not be an issue because Social Security has trust funds to cover the gap; however, it has already tapped into them, and once those trust funds are depleted, Social Security will have to slash payouts across the board to make up the difference.
According to the most recent Social Security Trustees Report, the Old-Age and Survivors Insurance (OASI) Trust Fund, which funds retirement benefits, is set to expire in 2033 or 2035 if combined with the Disability Insurance (DI) Trust Funds (which is not expected to run out on its own until 2098 due to the small number of people it serves).
This indicates there are around ten years remaining to find a solution. And, while everything appears to point to a solution, after all, Social Security is the most popular program in the country, waiting for Congress to reach a decision would be stupid.
What can future retirees do to improve their situation
Those who are still working have more possibilities than those who rely on the program. Increasing your savings and taking advantage of every policy the Internal Revenue Service (IRS) has implemented to boost tax-advantaged 401(k) or IRA accounts will be the first steps toward guaranteeing that you have enough to live on after retirement. To help with this, the IRS has unique provisions that allow workers over the age of 50 to contribute more to their retirement accounts.
The stock market will also be your friend; review your portfolio and speak with an expert to develop the greatest possible investment strategy that will benefit you for years to come. The most important decision you will have to make is to reconsider your retirement plans.
Most people will be unable to retire at the age of 62 (the earliest they may claim benefits), but if you have enough passive income and assets, you can still take a step back and plan for a less demanding career. Waiting until you reach the age of 70 to claim benefits is ideal, but if that is not possible, waiting as long as you can is preferable than claiming right away.
What to do if you are already retired
Retirees will have fewer options for improving their finances throughout retirement and will be less reliant on Social Security, but that does not imply they should not try. Joining the gig economy to increase your income, or choosing a low-stress part-time work such as pet sitting or waiting in a café, could help you earn money, stay connected to the world, and possibly even receive a new retirement plan.
Earning an income will offer you more breathing room and allow you to build up a modest cushion that you can use later if Social Security cuts occur.
Relocating to a less expensive region of the country is an option for those who live in high-cost areas, but leaving friends and family behind can be difficult, especially if you go to a place with no safety network.