Proposed Legislation Won’t Fix Social Security
The message from two new pieces of proposed Social Security legislation is clear: We have passed the point where we can expand benefits.
The key point is not what is in the proposals but how they fail. As ineffective as the proposals are, pain will only get worse with time.
Advisors should take a close look at how Congress is proposing to deal with the financial gaps that have developed within the Social Security system over the past 40 years. For the first time in history, changes are going to affect a majority of voters – your clients.
While these proposals have little chance of success, they demonstrate how little success taxes have on extending the life of Social Security. That conclusion should be viewed in the context that the longer we wait to address the system’s shortfall, the harder it gets.
Fixing the system will never be easier.
The program has $19.8 trillion in promises for which it does not expect to generate revenue. The current structure of the program means that retirees would experience a reduction of benefits in roughly 12 years, which approximately equates to the life expectancy of a typical 75-year-old.