Social Security is a longstanding part of working and retired Americans’ financial lives. President Franklin D. Roosevelt enacted a limited form of the program in 1935. The “social insurance” program was designed to provide a safety net against outliving one’s savings.
Social Security has grown in scope massively since the 1930s, and it represents an important stream of retirement income (as well as survivor benefits and disability benefits) for millions of Americans. However, changing demographics and the wholesale retirement of Baby Boomers call the program’s viability into question. A lot has been postulated in recent years about Social Security’s challenges.
The Social Security Board of Trustees released their annual report on April 22. The behemoth 270-page report discusses the financial condition of the system and provides long-term projections. To put it simply, there is no threat to the program’s viability in the short run. However, the medium- to long-term outlook remains unsettling.
In the 2019 Annual Report to Congress, the Trustees announced:
What are some ways lawmakers could address the projected shortfall?
It is difficult to predict what action Congress might take or when they might take it. From a financial planning standpoint, we remember that Social Security is not intended to be the only, or even the biggest, source of one’s retirement income. Rather, it should supplement other retirement savings.
The Social Security Administration states that the average retiree’s monthly Social Security retirement benefit is $1,461. The maximum Social Security benefit for a worker retiring at full retirement age is $2,861. The average monthly benefit for a couple who are both receiving benefits is $2,448.
Those of us not retired yet can find personalized estimates of our future benefits at ssa.gov/myaccount. Please feel free to reach out if you would like to discuss your Social Security benefits within the context of your overall retirement planning. Social Security is an important topic to all of us, and we will continue to monitor updates as time goes on.