…revamping the formula that presently calculates monthly benefits based on a worker’s average earnings over 35 years to one that’s calculated on the actual number of years one is actually working and contributing to Social Security.
Both Senators King and Cassidy told Semafor, “there are no cuts for Americans currently receiving benefits in our plan”. What’s not said is just as important. Ultimately any postponement of Social Security eligibility or recasting the benefit formulas means most Americans in the future will receive less money during their lifetime. The Congressional Budget Office reports if Congress fails to enact needed reforms for the fund that Social Security benefits would be reduced by approximately 20% beginning in 2032.
Any future reduction of benefits or increases to the retirement age could create a perfect storm- one that could force millions to look to what is typically their lar
gest asset, their home.
Columnist Joseph Zeballos-Roig observes that any increase of the retirement age is likely a non-starter with Congressional Democrats who are more likely to support a Social Security tax on annual earnings above the current $160,000 cap. Regardless, our nation as a whole, elected officials and citizens alike, have a serious spending problem. And that applies to both parties. Until the federal government’s largesse with taxpayers’ dollars in discretionary spending is diminished, mandatory budget items such as Social Security and Medicare will be targeted for cuts or new sources of revenue. And with entitlements accounting for nearly one-third of U.S. federal spending citizens of all ages will want to stand up and take notice.
In the short term we can expect the usual, for Congress to kick the proverbial can down the road. After all, who wants to lose their seat for backing such reforms? Let the next guy or gal do it. However, at some point, Social Security benefits will have to either be reduced or postponed, neither of which is painless. When reforms eventually come to pass they likely will serve as a driving force for millions of older Americans to look to their home’s value as a potential stop-gap in their retirement income planning.
How do you think older Americans would respond if Social Security benefits were cut? Comment below and share your thoughts.
Additional Reading:
A bipartisan group of Senators is talking about raising the retirement age on Social Security
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