Is Social Security Retirement a Part of Your Retirement Planning?
According to SS Trustees 2016 Report, for 26 years between 1984 to 2009, the trust fund backing social security retirement benefits took in payroll contributions (tax) that were greater than the retirement benefit payments.
However, since 2010, benefits paid out have exceeded payroll taxes collected! In 2015, retirees received $742.9 billion in benefit payments while workers paid in $679.5 billion of payroll taxes.
In 2016, there are 2.8 workers paying payroll taxes for every one Social Security recipient of benefits. It is estimated by year 2030, there will be 2.3 workers paying payroll taxes for every 1 receiving social security retirement.
Are you counting on social security as a part of your retirement income? You can get your projected social security retirement income at different ages such as 62, 65, your “full retirement age,” and age 70. Will that be the amount you get then? Probably not.
There are ideas being floated now that involve a mandatory 2% payroll contribution (new tax) that each person may choose one of a limited number of choices where to “invest.” Then at retirement, the U.S. Government will pay that to you in addition to social security retirement. Is this a way to prop up the social security trust fund? Will it be in addition to social security or simply an attempt to try to meet the projected future amount?
This is a wakeup call to look at what you are saving toward retirement, how you are saving it – taxed or before tax, and how it will be taxed during retirement. You decide if you want to use all or a part of the projected social security retirement amount in planning your retirement income.
Being prepared is always a good rule of thumb and it is imperative when planning for your retirement income. Don’t leave anything to chance and know all the facts. Discuss your retirement planning with your financial advisor and CPA.
Disclosure: All information is believed to be accurate. Consult with your CPA, tax advisor. Every person and situation is different and may require detailed analysis before making any decisions or taking action.
Information Source: Social Security Trustees 2016 Report