#social-security

#social-security

Social Security is a program that millions of older Americans rely on today. And without those monthly benefits, many would find it a struggle to cover their basic costs. But Social Security is facing two major problems that lawmakers keep failing to address. Here's what those problems are, and what potential solutions exist for them. A revenue shortfall that could lead to broad benefit cuts

Romney said the U.S. is headed for an economic cliff as the Social Security Trust Fund races toward insolvency in 2034, according to a projection from the CRFB. Without congressional intervention, benefits would be slashed by roughly 23%, forcing the government to borrow trillions at potentially exorbitant interest rates or print money that could trigger hyperinflation.

In Social Security's Program Operations Manual System, there are 567 calculations that help you determine when the best age to claim Social Security is. Running through all of the different claiming options, especially if you are married, is something most people aren't really equipped to do on their own. A financial advisor can help you to fully understand how your claiming choices are going to affect your finances, so you don't leave a lot of money on the table without realizing it.

Mom worked for almost two decades after her divorce, but could not financially make up for the years she spent as a housewife. The low-paying jobs she had while married - cleaner, waitress, and such - counteracted her higher income as an administrative assistant. She ended up grossing $575.00 a month from social security, despite the fact that she could have drawn against my father's social security allotment for more than double that amount.

In Social Security benefits will increase by 2.8% in 2026. This is the Cost of Living Adjustment (COLA) that will apply next year. In most years, COLAs increase Social Security benefits. The purpose of COLAs is to help Social Security recipients avoid losing buying power due to the effects of inflation. Third-quarter data from a consumer price index is reviewed, and when it reveals rising prices, benefits go up based on the year-over-year increase in the cost of a basket of goods and services.

The mismatch stems from the way COLAs are calculated. Currently, the SSA bases annual increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure designed around the spending habits of younger, urban workers. An alternative measure, the Consumer Price Index for the Elderly (CPI-E) weights housing, health care and utilities more heavily and would have produced a 3.1% increase in 2026 instead of 2.8%, according to Investopedia.

When working Americans retire, they expect Social Security to pay them monthly benefits for the rest of their lives. Those benefits won't replace their paychecks in full, but they're a crucial source of retirement income nonetheless. The problem is that in the coming years, Social Security is anticipating a funding shortfall. And because of that, benefits are facing cuts. That could deal current retirees a catastrophic financial blow. It could also upend the plans of working Americans who plan to retire eventually.