The Social Security Reality Baby Boomers Were Never Fully Told

"Social Security benefits are a crucial income source for many Baby Boomers, especially as Fidelity reports that the average 401(k) balance for this generation comes in at just $249,300, while the average IRA balance totals around $257,002. Unfortunately, although many Boomers will rely on Social Security to help them cover essential costs, many members of this age group simply don't know the truth about this benefit program or what it can do for them."

"Most people know that they pay Social Security taxes out of their paychecks and that they get benefits in return. However, the fact that Social Security is considered an "earned" benefit funded by Social Security tax has created considerable confusion around what is actually happening to the money that workers are paying in. In fact, the Cato Institute reports that almost one in four Americans believes they have a personal Social Security account, while 55% of Americans have no idea how Social Security is funded."

"The reality is that the government can change the rules for how much money retirees get at any time, and they've done it before by moving the full retirement age later. Proposals were on the table as recently as the Obama Administration that would have resulted in retirees getting smaller Cost of Living Adjustments, which would be a de facto benefits cut. Worse, an automatic 17% benefits cut could"

Social Security benefits provide a crucial income source for many Baby Boomers while average 401(k) and IRA balances remain low relative to retirement needs. A substantial share of Boomers misunderstand Social Security mechanics, with nearly one in four believing they have a personal account and 55% unaware of how the program is funded. Social Security's trust fund faces impending shortfalls that could affect benefit levels. The government retains authority to change eligibility and benefit rules, as demonstrated by past increases in full retirement age. Proposals have sought smaller COLA increases and an automatic 17% benefit cut looms as a possible outcome.

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