Broker Check

Let Me Scare You, Please

| October 25, 2017
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Last week, I opined on the future of Social Security.  I predicted that future retirees (perhaps some in the boomer generation) with substantial income from other sources would be “means tested”, meaning that their benefits could be eliminated or reduced.  That would be the politically correct expedient for some future Congress; it’s easy to penalize “the rich”, because there are so few of them.  Never mind that, like the rest of us, they’ve contributed substantially into the system, and their benefits would likely be only a partial return of their own capital.

Today’s Gen-Xers and even Millennials face an even bigger problem.  Unless changes are made, the Social Security Trust Fund will be beyond depleted by the time they reach their projected retirement age.  Estimates vary, but most experts say it would take an income tax rate well above 50% for them to receive their promised benefits.*  If we still have graduated income tax rates at that time, the rate on the “evil rich” will be even higher; likely, much higher.

As I said last week, there is a generational storm brewing, and I think the best course of action is to begin taking full responsibility for your own financial security in retirement. 

On that cheery note, Happy Hallowe’en; and PATIENCE, DISCIPLINE, and CONFIDENCE in the FUTURE!  mh

*Among many other sources, a good short read on the subject is Falling Short: The Coming Retirement Crisis and What to Do About It, by Charles D. Ellis, Alice H. Munnell, and Andrew D. Eschtruth, Oxford University Press, 2014.

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