Local financial advisor explains Social Security shortfall
MISHAWAKA, Ind. — In 2035, your monthly cash benefit from Social Security, won’t be paid in full.
That’s what the Social Security Administration’s annual report is projecting.
Researchers have found Trust Fund reserves will drop from just under $3 trillion to zero by the year 2034.
According to the report, Social Security’s Cost is projected to exceed total income.
For years, Social Security collected more tax revenues than needed to pay benefits. That money went into a Trust Fund for future program spending.
Starting in 2020, years of cash flow deficits will require the program to take from Trust Fund reserves in order to pay schedules benefits.
Experts say, as more baby boomers retire, there will be fewer dollars going into the program than out.
Edward Jones Financial Advisor Matt Carroll explained how Congress can fix the issue.
"Congress can do one of two things. They can either cut benefits or they can increase the Social Security tax. They have a good 15 years to make that decision. So folks who are concerned about Social Security should be talking to congress people and motivate them to make the changes necessary,” Carroll said.
Researchers and experts say that Congress needs to take action sooner rather than later.
Carroll says there are a few misconceptions that people have about the report and the program.
"I think the big thing is that folks think they won't see a social security check at all. One of the things people can do to prepared for that. One buy extra savings and the other thing is to talk to the congress people. This can be fixed and that is what a lot of people may have a misunderstanding about," he explained.
Carroll also says that many people also think that Congress has stolen money from the program over the years. He says that’s not the case. By law, Congress is allowed to lend that money out and then they pay it back with interest.
Social Security’s funding shortfall is steered mainly by demographic factors.
Experts say birth rates are one of those major reasons.
This report was an improvement from the last. The Trust Fund gained a year because a drop in people receiving money for disability.