In the past few months, Social Security has been at the center of many arguments. Concerns about possible cuts to Social Security checks are becoming more widespread. The fact that the Social Security trust fund is expected to run out of money by 2035 has made people who depend on these payouts nervous.
Experts say that these important perks could be cut if Congress doesn’t step in. Even though candidates said they would protect the program, things are much more involved than that.
Impending Shortfall
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Trust Fund Depletion
A trust fund for Social Security was set up to cover the difference between the payroll taxes that were collected and the payments that were given out. It was paid for by buying Treasury bonds with past profits, which earn interest. This trust fund is not, however, an endless source of money. The CEO of the National Committee to Preserve Social Security and Medicare, Max Reichmann, says that the trust fund assets will be used up within the next ten years, leaving only current payroll taxes to pay for benefits.
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Alternative Investments
Because the future is unclear, retirees should think about other investments that could help them protect their money. Here are two choices that are stable and could earn you money:
Annuities
Annuities are types of insurance that give regular payouts to the owner. They are often used as a way to get money in retirement. They are meant to protect you from running out of money in retirement by giving you a steady amount of income. Annuities grow tax-deferred, which means you don’t have to pay taxes on the money until it’s paid out. This can be a steady way to make money, especially if your Social Security payments are cut.
Treasury Bonds
Taking Proactive Steps
There is still no proof that Social Security checks will be cut, but the idea of fewer payments is a real worry. It is important to start planning for your financial future right now, rather than waiting for official news. Retirees can protect their finances against possible changes to their Social Security income by looking into other investments, such as pensions and Treasury bonds.
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In the end, the fight over Social Security shows how important it is to plan ahead for retirement. Congress might finally do something about the program’s shortfall, but people are also responsible for their own financial futures.
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