{"id":95,"date":"2018-09-12T00:00:00","date_gmt":"2018-09-12T00:00:00","guid":{"rendered":"https:\/\/www.retirementrefined.com\/index.php\/2018\/09\/12\/social-security-status-update-solvency-and-spousal-option-changes\/"},"modified":"2018-09-12T00:00:00","modified_gmt":"2018-09-12T00:00:00","slug":"social-security-status-update-solvency-and-spousal-option-changes","status":"publish","type":"post","link":"https:\/\/www.retirementrefined.com\/social-security-status-update-solvency-and-spousal-option-changes","title":{"rendered":"Social Security Status Update &#8211; Solvency and Spousal Option Changes"},"content":{"rendered":"<h3 style=\"text-align: center;\"><strong>83 Years of Benefits of Social Security Benefits<\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>The Social Security program provides workers and their families with Retirement, Disability and Survivors Insurance Benefits. During the program\u2019s 83-year history, it has collected approximately $20.9 trillion and paid out $18 trillion, leavings asset reserves of $2.9 trillion as of the end of 2017.<\/p>\n<p>&nbsp;<\/p>\n<p>Currently 19% of the United States population is receiving a monthly benefit payment from Social Security. Approximately 62 million beneficiaries out of 328 million Americans.<\/p>\n<p>&nbsp;<\/p>\n<p>The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, and the Disability Insurance (DI) Trust Fund, which pays disability benefits are separate entities, however the Trustees typically provide reports combining the two trust funds.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\" align=\"center\"><strong><span style=\"color: #000000; font-family: Calibri;\">2017 Social Security Program Results<\/span><\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>In 2017, Income totaled $996.6 billion, costs $952.5 billion, leaving a net increase in Reserves of $ 44.1 billion. Reserves increased from $2,847.7 trillion as of December 31, 2016 to $2,891.8 as of December 31, 2017.<\/p>\n<p>&nbsp;<\/p>\n<p>The Income is broken down into 3 components; Payroll taxes $996.6 billion, Taxes on SS benefits $37.9 billion and $85.1 billion from Interest on Reserves.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><strong>Program Income and Costs<\/strong><\/p>\n<p style=\"text-align: left; padding-left: 30px;\"><strong>Income<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $996.6 Billion<\/p>\n<ul>\n<li>Payroll Taxes \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $873.6<\/li>\n<li>Taxes on Benefits \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $37.9<\/li>\n<li>Interest on Reserves \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $85.1<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\"><strong>Costs<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $941.5 Billion<\/p>\n<ul>\n<li>Benefit Payments\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $941.5<\/li>\n<li>Railroad Retirement<\/li>\n<li>Financial Interchange\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $4.5<\/li>\n<li>Administrative\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $6.5<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\"><strong>Net Income (Increase in Reserves)<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 44.1 Billion<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>The Trustees NOW project that total costs will exceed total income (including interest) beginning in 2018 and continuing throughout the \u201clong-range period (2018-2092)\u201d.<\/p>\n<p>&nbsp;<\/p>\n<p>Going forward it is now anticipated that Reserves will need to be liquidated each year to meet annual costs. So each year, we should start to witness the Reserves shrinking until depletion.<\/p>\n<p>&nbsp;<\/p>\n<p>In the 2018 report, the Trustees project the combined trust funds will be depleted in 2034, the same year as 2017. After the Trust Fund is depleted, there is projected income coming in to meet approximately 76% of future annual costs. Of course, this assumes no reforms to Social Security.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\"><strong>What Will It Take to Restore Solvency to Social Security<\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>With a scheduled depletion date of 2034, our politicians continue to \u201ckick the can down the road\u201d. I believe the politicians who skillfully and carefully provide the necessary reforms will be applauded for their efforts, even if payroll taxes rise.<\/p>\n<p>&nbsp;<\/p>\n<p>Over the last several years, we\u2019ve heard many ideas on how to restore the long-term solvency to this necessary program. (Necessary in my opinion). Ideas on how to reform the system include:<\/p>\n<ul>\n<li>Increase the maximum earnings subject to the Social Security Tax (Currently 128,400 for 2018)<\/li>\n<li>Raise the Normal Retirement Age (currently 66 for those born between 1943 and 1954; 67 for those born in 1960 or later)<\/li>\n<li>Lower Benefits for Future Retirees<\/li>\n<li>Reduce or Change Cost of Living Adjustments<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\"><strong>Creative Solutions? <\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>I continue to read many proposals that combine several of the above ideas plus others. The bottom line, if we are going to restore the solvency to the program, we need to either decrease benefits, increase the revenue funding the system or perhaps be a bit more creative. I believe we need a combination of small increasing payroll taxes and a slight adjustment higher to the Full Retirement Age for Future Generations who are under the age of 50. I\u2019ve read many proposals that appear to work numerically however nothing is going forward at this time.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\"><strong>Cost of Living Adjustments to Social Security<\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>I do not agree or believe we should reduce the Cost of Living Adjustment. Currently the COLA for Social Security Retirement Benefits is based on CPI-U (Urban Wage Earners and Clerical Index). This is such thing called CPI-E (Consumer Price Index for the Elderly) which measures spending habits of households ages 62 plus. This index would have historically offered higher inflation adjustments because it takes into consideration health care spending and other expenses more unique to people 62 and over.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 align=\"center\"><strong><span style=\"color: #000000; font-family: Calibri;\">Social Security Spousal Option Changes<\/span><\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>The Bipartisan Budget Act of 2015 surprised us with significant changes to Social Security Retirement Spousal Claiming Strategy options.\u00a0\u00a0 File and Suspend was unavailable to anyone after April 2016 and the Restricted Application is only available if born prior to January 2, 1954. The good news is that everyone who followed the rules and qualified was grandfathered going forward.<\/p>\n<p>&nbsp;<\/p>\n<p>These benefits are significant and we have many retirees who have employed a spousal option and are now receiving their age 70 benefit, which is 32% higher than at age 66. <strong>Not one of our clients currently collecting a check 32% higher is unhappy.<\/strong> This higher check will last for their lifetime and provide the largest survivor benefit.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\"><strong>So, How Do You Plan?<\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>I\u2019ve now had the pleasure of offering Social Security Workshops for over 9 years and have met with hundreds of couples and individuals to assist in determining best claiming strategies. I\u2019ve learned a lot over the years, however the following standout:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>People ARE influenced by friends, co-workers to begin collecting benefits sooner.<\/li>\n<li>Many make claiming decisions without a thorough understanding of the rules and their specific options.<\/li>\n<li>Many Professional Advisors (Financial Planners, CPA\u2019s, Attorney\u2019s) do not have a thorough understanding of the rules.<\/li>\n<li>When Social Security Claiming Options are illustrated as part of an overall Retirement Income Plan, most people make educated and beneficial decisions.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>From my experience the best way to plan your Social Security involves 3 steps:<\/p>\n<ol>\n<li>Learn the rules as they apply to you.<\/li>\n<li>Have an experienced Retirement Income Planner run projections of your Social Security Claiming Strategy options for a thorough understanding.<\/li>\n<li>Incorporate your Claiming Strategy options into separate Retirement Income Planning Scenarios to assess the impact of each option.<\/li>\n<\/ol>\n<p>The Social Security Claiming Decision typically becomes crystal clear.<\/p>\n<p>&nbsp;<\/p>\n<h3><\/h3>\n<h3 align=\"center\"><strong><span style=\"color: #000000; font-family: Calibri;\">Upcoming Workshops<\/span><\/strong><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>I have thoroughly enjoyed providing Social Security Education to assist people in making educated, informed, and meaningful decisions.<\/p>\n<p>&nbsp;<\/p>\n<p>For a list of our upcoming <strong>Social Security<\/strong> Workshops, please click &#8211; <a href=\"https:\/\/retirementrefined.com\/social-security-workshops\/\">Social Security Workshops<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>For a list of our other educational workshops on <strong>Retirement Income\/Tax Planning<\/strong>, click <a href=\"https:\/\/retirementrefined.com\/iraretirement-tax-planning-workshop\/\">Retirement Income Planning Workshops<\/a> and <strong>Medicare<\/strong>, please click <a href=\"https:\/\/retirementrefined.com\/medicare-workshop\/\">Medicare Workshops<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"color: #000000; font-family: Calibri;\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>83 Years of Benefits of Social Security Benefits &nbsp; &nbsp; The Social Security program provides workers and their families with Retirement, Disability and Survivors Insurance Benefits. During the program\u2019s 83-year history, it has collected approximately $20.9 trillion and paid out $18 trillion, leavings asset reserves of $2.9 trillion as of the end of 2017. &nbsp; [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","compliance_id":"","post_disclaimer":"","footnotes":""},"categories":[5],"tags":[],"_links":{"self":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/95"}],"collection":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/comments?post=95"}],"version-history":[{"count":0,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/95\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media?parent=95"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/categories?post=95"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/tags?post=95"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}