Americans are living longer each year. Every 6 years, the average life expectancy increases by 1 year. For example, the US life expectancy at birth was 60.8 years in 1921 but has increased to 77.8 years in 2021. Since Americans are living longer, saving for retirement is becoming more crucial. Relying on Social Security or a pension may not provide you with enough income, especially in later years. In fact, the Social Security trust fund is in danger of running out of funds in the coming years if changes are not made by Congress. The Social Security Administration is aware of this and has updated the benefit statements to inform Americans. But let’s be honest, most don’t read the fine print.
“Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes collected will be enough to pay only about 80 percent of scheduled benefits.”
This may seem alarming and it is. Congress will likely make changes to the laws governing Social Security before 2035 when benefits could be reduced. Upcoming changes may include raising Social Security taxes, increasing retirement age, or reducing benefits (existing or future). I’m not advocating for these changes, but it’s easy to see that if adjustments aren’t made there won’t be money for the benefit payments.
I’m not writing this to alarm you, but rather to inform you of the potential upcoming changes. I also want to stress the importance of your individual retirement savings. Sometimes it’s hard to manage retirement and your savings on your own. That’s why we specialize in retirement planning and creating a retirement income stream that’s separate from social security.