Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
According to a report last month from the Social Security Administration, the trust fund that the government uses to help pay out benefits to retirees is expected to run out in late 2032. At that point, Social Security will only be able to pay 78% of your scheduled retirement benefits. This isn’t a surprise: We’ve known for many years it eventually would happen, but there hasn’t been enough political will in Washington, D.C., to rescue the system.
On July 6, Trump said his administration was looking at adopting the Australian system — or at least elements of the Australian system — and would try to get Congress onboard. To be clear, there is no magic wand in this scenario. Merging one system into another – or adding a giant appendage to the current system – wouldn’t be easy. As IBJ financial columnist Peter Dunn says in this week’s podcast, there could be significant tradeoffs. But who should take the biggest hit?
In this week’s discussion, Pete takes the point of view of employers and host Mason King has the perspective of someone who plans to retire soon. They also hash out the viability of tweaking the current Social Security system to get the fund back on track.
Click here to find the IBJ Podcast each Monday. You can also subscribe at iTunes, Tune In, Spotify and any other place you find podcasts.
You can also listen to these recent episodes:
IBJ Podcast: He left the Fortune 500 fast track for local nonprofits and to help men be better fathers
IBJ Podcast: Indy cybersecurity expert on preparing for impending AI threat to businesses
IBJ Podcast: Immigration law firm swells from one-man band to 137 employees, thousands of cases
IBJ Podcast: Indy-based tech exec on joining global firm, being remote-only leader
IBJ Podcast: Indy Pride chair talks festival changes, political backdrop and financial challenges
IBJ Podcast: Pete the Planner on why Americans feel broke at $150,000 a year
Please enable JavaScript to view this content.
The fairest way to save Social Security:
1. Remove the cap on earnings subject to SS, or at least increase it to $500,000 or $1,000,000
2. Impose SS tax on unearned income such as interest, dividends, capital gains, at least for those whose AGI is over $100,000
3. Increase the SS tax rate from 7.65% for both EE & ER to perhaps 10%, again, if your AGI is over a certain amount, say $100,000
4. MEANS-TEST benefits for anyone with AGI over $250,000 – they simply don’t need it
5. Do NOT increase the retirement age since it is too much of a burden on blue collar people who do physical work or for anyone nearing the current retirement age
6. All of this is to avoid cutting benefits for anyone with moderate means, especially if they are aged 50 or older. They simply do not have time to make changes to their retirement planning.