What You Need to Know
- Advisors put in their ideas on how to fix Social Security.
- Raising payroll taxes and the retirement age were two ideas.
- One person said to put all the money in the S&P 500.
Last week the long-awaited Social Security Trustees Report came out, with findings that the Old-Age and Survivors Insurance Trust Fund — the one that pays out benefits to retirees — will be depleted by 2033, a year earlier than last year’s projection.
The predictions actually gave some experts hope that the COVID-19 pandemic hasn’t hurt Social Security as much as expected, though some observers expect more damage to show up in next year’s report.
In a recent tweet, Jeffrey Levine, chief planning officer of Buckingham Strategic Wealth, asked the question: If you were in charge, what would you do to “fix” Social Security?
Last week, the Social Security Board of Trustees released its Annual Report. The headline news was that the Trust Fund (for retirement/spousal/survivor benefits) is projected to be depleted by 2033.
If you were in charge, what would you do to "fix" Social Security?
— Jeff "The Buckinghammer" Levine, CPA/PFS, CFP® (@CPAPlanner) September 7, 2021
The response was fast and furious. Here are some of those person-on-the-street ideas:
Take a vote.
“Not sure if there’s a process, but get it on the ballot for an upcoming national election. Have folks vote. Either raise tax revenue to fully fund promised benefits, or just have the benefits be variable, based on that year’s receipts.” — John Stoj (@StojBoj)
Levine responded that although the idea was interesting, “I can’t imagine how hard it would be for those living mostly off Social Security to plan in an environment like that though.”
Enforce the laws.
“How about stepping up compliance on payment of [self-employment] tax? A [U.S. Treasury Inspector General for Tax Administration] report from a few years ago found $12 billion in discrepancies on 1099-Ks that were not investigated at all.” — Liz Farr (@liz_farr)
When Levine cheered her on by using facts, she responded: “Sometimes the simplest solution is just to enforce what’s already law, not to craft additional laws.”
Leave it alone.
“Nothing. No need to ‘fix’ it. Currency issuer can always pay its bills. The real question is, will we have the resources to provide for growing senior population?” — Dan Jamieson (@dvjamieson)
Levine responded: “I understand you’re making [a Modern Monetary Theory] argument, but even if you fully embrace MMT, that doesn’t fix the problem by itself. MMT says it CAN be paid for via deficit spending, not that it must be. In essence, [your] ‘fix’ is “pay the benefits and increase/ignore the resulting debt.”