Social Security: Possible Government Solutions

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To address Social Security's funding concerns, the government could pursue a combination of these changes:

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• Increase Payroll Taxes: This would raise the Social Security tax rate for all workers.
• Raise the Earning Cap: The current cap of $168,600 could be raised, allowing higher earners to contribute more.
• Raise the Full Retirement Age: Currently, full benefits are available at age 67 for those born after 1960. This age could be increased.
• Adjust the Cost of Living Adjustment (COLA): The government could reduce or eliminate the COLA that adjusts Social Security payments for inflation, impacting current recipients.
• Reduce or Eliminate Benefits: Another option could be for individuals to rely more heavily on personal savings, with reduced or no Social Security benefits.

What You Can Control

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While future policy changes are uncertain, you have control over how you prepare for retirement:

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• Increase Your Savings: Contributing only the minimum match in your 401(k) may not be enough. Consider increasing your savings to account for a potential decrease in Social Security benefits.
• Plan for Your Ideal Retirement: The amount you need to retire depends on factors like:
  • Income
  • Lifestyle choices, including travel
  • Housing costs (rent or own)
  • Expected healthcare and assisted living expenses
  • Support for family members
  • Market conditions and your investments

How Much Do You Need for Retirement?

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With people living longer, many want to retire early. As such, you may need to plan for 25 to 35 years in retirement. The exact amount varies for everyone, but a solid financial plan that accounts for your unique needs can make a big difference.

Navigating Social Security, retirement savings, and all the variables that impact your financial future can be challenging. Reach out to Laura Scholz to discuss strategies tailored to your goals.

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