Added: May 16, 2011

From: johngfa54

Duration: 1:35

Will Social Security Benefits be there for me? Many of today's baby boomers are very concerned that the Social Security system will run out of money in the near future, and will not be solvent when you retire. Let's review: What is Social Security Social Security History Social Security Tax How Social Security is suppose to be funded Current financial condition of social security Potential changes to fix social security system The Social Security Act was signed into law in 1935 and the system was planned as a pay-as-you-go arrangement whereby the contributions of workers would go into a trust fund out of which benefits would immediately be paid to current retirees. The goal was to be able to pay social security benefits and have a small cushion. According to the May 2010 OADDI (Social Security) trustee report, the Social Security Trust fund had a balance of $2.5 trillion invested in special-issue US government securities. The securities pay market interest rates and can be liquidated at face value prior to maturity at face value so that principals not subject to interest rate risk. The trust fund is expected to grow to almost $3.8 trillion by 2019. Please go to the following link for the 2010 Trust Report. www.ssa.gov/OACT/TR/2010/ Sometime in 2025 payouts in the social security trust fund will exceed receipts. By 2037 the social security trust fund reserves will be liquidated and current contributions will be sufficient to pay approximately 78% of scheduled social security benefits. As an avalanche of baby boomers start to draw down their Social Security Benefits, political attention is being focused once again on the solvency of the Social Security Administration. It will be extremely important for Congress to make changes sometime over the next couple of years so that they can be phased in on a gradual basis.   Some of the potential changes that are being discussed in Congress are: Increasing the FICA payroll tax rate Increasing the limit on taxable earnings( currently $106,800) Increase social security retirement age based on increased life expectancy. Slight reduction in the cost of living index Invest some of the social security trust fund assets in equities and alternative assets Make 100% of social security payments taxable based on income Change the Social Security benefit formula It is quite clear that Congress will have to make changes that can phased in over a long period of time in order to ensure that there will be more than enough money to pay promised . Baby boomers should plan to maximize their social security benefits because the changes listed above should have minimal impact on social security benefits during their lifetime. For more information on Social Security reform please go to the website of the American Academy of Actuaries at www.actuary.org Please feel free to email me at johnfarrell@gfallc.com if you need help with maximizing your families' social security benefits.

Channel: Education

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