social security diminished

Retirement is a time to enjoy all the things you never could before. If you’re like many retirees, it’s likely you have saved for decades in order to relish in a financially secure retirement.

One of the most important retirement savings vehicles available for Americans as we all know and come to expect when we hit retirement age is Social Security.

Today, experts are warning that our nation’s Social Security trust fund will run out of money by 2035, at which point benefits would either need to be cut or taxes raised.

This daunting realization came before the coronavirus pandemic hit and some are warning it could be as soon as 2029.

Mitchell, the director of the University of Pennsylvania Wharton School’s Pension Research Council, noted that “it seems that the date of insolvency of SS has crept sooner.”

When unemployment soared throughout the pandemic, it caused a significant decline in contributions to Social Security taxes. Even as the pandemic continues to creep and affect our lives, the government is still required to make payments to retirees.

Another reason for the drift is that some Americans chose to retire early even if it meant losing a percentage of their monthly benefits.

Then there’s another big challenge: inflation. The never-ending money printing, stimulus checks, and unemployment rate have all played a factor in all of this.

The trust fund only invests in US Treasuries and they aren’t keeping up with inflation.

How is it impacting the fund?

Well, with an inflation rate at around 5.4% over the past year and US Treasury securities earning around 2.4% at the current interest rate, a 3% erosion tells us the numbers are just not adding up.

The already challenged program is facing a lot of pressure. The program’s trustees have yet to release their 2021 report and at whatever the inflation rate winds up to be next year, it could add billions of dollars in additional costs.

Currently, Social Security pays out about $93.2 billion in benefits each month. Soon, that number could be higher.

Worrying about the program’s depleting funds isn’t anything new. It’s how fast it’s emptying.

There are only 3 ways to alleviate Social Security: raise taxes, cut benefits, or improve the rate of return on the trust funds.

Bottom line is that you’re probably going to pay for it one way or another. According to The Motley Fool:

If taxes are raised, you’ll pay for it as a worker, as Social Security is largely funded through payroll taxes. If benefits are cut, you’ll pay for it as a retiree, as you’ll get less than you would otherwise expect based on your currently projected benefit levels. If the program’s invested rate of return increases, it requires either a major act of Congress or higher interest rates.

The risk of your retirement savings isn’t something to take lightly. The good news is that time is one of the most valuable commodities and the power of choice is in your hands on what to do about it.

Social Security provides a foundation for retirement, but you can’t count on it alone.

Let this serve as a reminder that your retirement years are a time to enjoy your decades-long hard work.

Your savings should be protected at all costs. Call American Hartford Gold today at 800-462-0071 to learn how thousands of Americans are turning to tangible assets like gold to preserve their wealth.