Nationally recognized expert in Social Security Mary Beth Franklin joins the show to celebrate the 80th birthday of Social Security. Mary Beth is a contributing editor at InvestmentNews and writes regularly about the latest research and thought leadership on retirement income planning. You can follow her on Twitter here.
Mary Beth reviewed the roots of Social Security – did you know that one of its main purposes was to get old workers out of the workforce in order to make way for younger ones?
You may have heard people say, “Social Security is broke,” which is just wrong. The SS Trust Fund, which carried surpluses for many years, is going to be depleted by 2034, unless government takes action. At that time, there would be enough workers to pay for about 75 percent of promised benefits. If the country wants to maintain the current system, Mary Beth says that there will probably be a combination of three fixes, which will be phased in over a long period of time:
- Increase SS Full Retirement Age
- Increase SS wage base: Workers and employers each pay 7.65% up to $118,500 (FICA tax) to fund SS. Mary Beth said that when the system was created, the wage base was supposed to represent 90 percent of wages. Due to changes in incomes at the top, that’s not the case. In order to get back to 90 percent, the wage base would have to rise to approximately $250K.
- Decrease or income test benefits
Mary Beth also outlined some of her favorite SS strategies and highlighted the common SS mistakes that many Americans can avoid.
Our callers also had SS on their minds: John retired last year and has not yet claimed SS, Mike works part time and wonder when he should claim SS.
Robert asked about the Acorns app, which invests spare change from everyday transactions (bug thumbs up!) and Sarah wonders how to protect her savings and investment accounts against hackers.
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