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The good news: Based on findings from the new 2021 annual report from the Social Security trustees, the updated depletion date for combined trust funds (retirement and disability) is 2033, up one year from the previously determined 2034. This is a better outlook than many feared following the pandemic, and bear in mind, it’s based around the unlikely instance in which the government makes no changes to halt depletion (meaning, only 78 percent of Social Security benefits can be covered).
Finding a fix: Social Security trustees see this new report as positive, in that the Social Security system itself is still holding strong. They view 2033 as a deadline that must be hit in order to maintain full benefits; however, they aren’t as keen on lawmakers’ slow pace to make the necessary moves. The Biden administration is currently focused on both the $3.5 trillion infrastructure spending package, as well as the Afghanistan withdrawal – while at the other end of the spectrum, Republican legislators have proposed a Social Security benefits cut to reduce the looming depletion date.
Upcoming increases: As expected, both sides have experienced mixed reviews, and what will ultimately be done by government officials is still unknown. At the same time, if you’re currently a Social Security recipient, you’ll be happy to know that a cost-of-living-adjustment (COLA) is on the horizon for 2022. The amount is set to be announced in October, but estimates vary from three percent, to as a high as six percent. The bad news is, Medicare Part B premiums for outpatient services are set to increase due to inflation by about seven percent.
My thoughts: Social security will not look much different in the future than it does today. This is especially the case if you are close to filing, or have already filed, and taxes are increasing. In that light, stick with your Social Security strategy, and always have a pro-active tax strategy.