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When planning your retirement, you may be thinking you can count on Social Security benefits to see you through a majority of your financial needs. Unfortunately, Social Security has undergone recent changes that will majorly impact those planning to rely on it as they go into their golden years of retirement. Here are a few changes that have occurred just this year and how they affect you and your retirement planning.
COLA- or the Cost of Living- Adjustments react with the rising costs of housing, food, and materials in the US. This consumer price index may become attached to elderly benefits. At this time, that attachment is via the Consumer Price Index for Wages (CPIW). This increase from 2020 to 2021 was 1.3%. However, you should be aware that while this does increase the amount, sometimes the amount that it gains is negated by the premium that is taken out for Medicare Part B.
FICA Tax Increase
The FICA tax is what is removed automatically from your paycheck to pay into Social Security and Medicare. For those who make more than $142,800, that percentage has increased. If you are below that threshold, you will still be paying the same amount you have already been paying.
Future of Financial Security
Is Social Security even going to be around by the time you are ready to begin withdrawing from it? It is impossible to say for sure one way or the other at this time, but it is something we are constantly keeping a sharp eye on. Being aware of these smaller changes helps us see where this program may be headed in the future. One thing is clear, however. If changes are not made by a certain point, then you will have to plan on not having the full amount of benefits that you anticipated.
The year 2034 has been earmarked as a cornerstone year for Social Security. If no changes are made to it by then, retirees can expect to only receive between 70% and 80% of the amount they had expected, simply because there will not be enough money in Social Security to pay out any more than that.
It is important to be aware of these changes, because if you are planning carefully for your retirement, you are likely taking into account exact numbers of your different Social Security benefits. If one of those benefits is suddenly cut by 25%, that can damage your retirement plans.
Our Unlocked Process
At B.A. Schrock Financial Group, we make it our mission to ensure you are managing your financials in the best way possible. Through onboarding and continued management, our team of experts reviews your information and guides you down the path to financial confidence. Collaborative planning and constant analysis mean that you have someone on your side helping you manage your money. Stay ahead of the game and prepare for a confident, peaceful retirement with our help. Contact us today to learn more.