![]() The report said the federal government could “immediately and permanently” raise the payroll tax rates by about 4.9% to keep the trusts funded until near the end of the century, when the trusts would again face a gap. The CBO did give some options to push the gap out to 2096. That discrepancy would lead to a depletion of the trust fund coffers within the next decade-a potential hit to retirement income for tens of millions of Americans. This growth would be partially offset by a recent change in the age when people can receive 100% of their Social Security benefits, which was moved to 67 years old instead of 65 for people born after 1959.Įven with the offset, the CBO found that if Social Security benefits are paid out as scheduled, the program would increase from 5.0% of gross domestic product in 2022 to 7.0% in 2096, with revenues remaining around just 4.6% over the same period. The CBO said it expects real earnings-meaning adjusted for inflation-to rise in coming years, which would in turn mean larger payouts for initial Social Security benefits that are paid based on a person’s earnings history. In addition to tax revenues, the trusts earn interest payments on the Treasury securities they hold. The payroll tax is generally 12.4% of earnings up to a maximum annual amount, with workers and employers each paying half, and self-employed workers paying the full amount, according to the CBO. Social Security is financed by payroll taxes and income taxes on benefits that are credited to two trust funds collectively known as the Old-Age, Survivors and Disability Insurance (OASDI) funds. The gap between scheduled and payable benefits would widen to 35% by 2096, and remain stable thereafter, according to the Washington DC-based agency. In 2034, the CBO projects revenues to equal 77% of the program’s scheduled payments, resulting in a 23% shortfall for retirees. “Regardless of where Social Security ends up, we need to do much more than prior generations, whether that investing in an additional IRA or Roth IRA, or being diversified from a tax perspective,” Lynch says. Whether or not the federal government takes action, advisers should be helping plan participants be ready for the worst-case scenario, he says. Lynch says that the retirement industry may not know where Social Security is going to end up, but that the Social Security Administration itself has been very vocal in its funding concerns. “If things do go away and we get three quarters on the dollar from Social Security, then we want to have gone ahead and planned for it.” “It’s important that an adviser can have a conversation with a client about Social Security and fill in the different sources of retirement income to meet their goals,” says Mike Lynch, managing director of applied insights at Hartford Funds. The forecast adds to retirement industry voices and surveys noting that current and soon-to-be retirees may face retirement income shortfalls, in part due to historically low interest rates, combined with rising inflation. The budget forecast comes even as Congress weighs the passage of retirement policy known as SECURE 2.0 in an omnibus spending package expected to be voted on this week. In the report released Friday, the bipartisan federal agency said that two trust funds used to pay for Social Security and payroll taxes will be depleted by 2033, resulting in a 23% cut in planned benefit payments in 2034. The Dodd-Frank Act transferred to the Consumer Financial Protection Bureau most of the rulemaking responsibilities added to this Act by the Fair and Accurate Credit Transactions Act and the Credit CARD Act, but the Commission retains all its enforcement authority.The latest long-term Social Security projections from the Congressional Budget Office say the federal government may not be able to meet the full amount of scheduled benefits as early as the next decade. The Fair and Accurate Credit Transactions Act added many provisions to this Act primarily relating to record accuracy and identity theft. In addition, users of the information for credit, insurance, or employment purposes must notify the consumer when an adverse action is taken on the basis of such reports. Companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act. The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. About the FTC Show/hide About the FTC menu items.News and Events Show/hide News and Events menu items.Advice and Guidance Show/hide Advice and Guidance menu items.Competition and Consumer Protection Guidance Documents.Enforcement Show/hide Enforcement menu items.
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