Boomers Counting on Social Security Should Think About Investing More Today as Insolvency Looms

24/7 Wall St. Key Points:

• Proposed Social Security reforms may raise the minimum retirement age from 62 to 64 and delay full benefits and bonus accruals by two years, impacting near-retirees’ financial timelines.
• High-income retirees earning over $250,000 annually could see reduced Social Security payouts under a tiered benefit cut, with steeper reductions for those earning closer to $1 million.
• Broader entitlement program reforms, including possible adjustments to Medicare and Medicaid, could follow Social Security changes, increasing financial pressure on future retirees.
• If a crisis is around the corner, make sure you speak to a financial advisor and make sure you’re positioned to weather the storm. Smart Asset can connect you with 3 serving your area in just a few moments. Click here to get started (sponsor)

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Transcript:

[00:00:04] Doug McIntyre: Let me go back to something that we’ve touched on before. You’ve got Elon Musk and President Trump going sort of through the, every federal employee looking at whether they do a good job. I think there are 3 million federal employees who aren’t in the defense department. So I don’t know if you cut 15 percent of them, you really haven’t saved that much money.

[00:00:28] Doug McIntyre: It’s a lot of people. It’s a lot of money. They understand just as everybody else does that the social safety net is where the money gets spent in the United States. So what are the odds that you think that they start to lay their hands on social security at all because it’s a train wreck and you got 2035 it’s it’s as they call out of money.

[00:00:51] Doug McIntyre: It’s not really the benefits have to drop. I think there’s a chance that people getting social security ought to get it a little bit nervous, not a bomb being going away, but whether or not it gets cut even modestly.

[00:01:05] Lee Jackson: Yeah, I’m telling you that would be the most difficult thing to sell in Washington, D.C. in the history of ever and, like we’ve discussed. I mean, and if you’re a high network person, I certainly understand the government said, well, you really don’t need this. And it’s like, too bad I paid into it. and, that’s where they need to make a deal. That’s where they gotta figure out how they can go to the wealthy around the United States and say, look, if you don’t take this, we’ll give you a commiserate tax credit for what it would be, or we’ll give you two times what it would’ve been, or something along those lines.

[00:01:41] Lee Jackson: And for the ultra wealthy. That may be a point, but they could never, cut on middle income, lower class, lower income people that I’ve just there, there would be pitchforks. And

[00:01:59] Doug McIntyre: Here’s my prediction of what the current administration will try to get done. The first thing is they’ll push out the age ranks by two years.

[00:02:09] Doug McIntyre: I think the, the earliest you can take it now is 62. That’ll go to 64 what they take call retirement, which is 65 or 66 moves out two years, and then the extra special, you get 8 percent more. Payment, which is 70. Now it’s pushed to 72. Anybody who’s got more than 250, 000 in active income after they’ve retired on a sliding scale, going up to a million dollars in income, you get less and less and less social security payment.

[00:02:40] Doug McIntyre: So graded.

[00:02:41] Lee Jackson: I think that’s a pretty good prediction. They have to figure a way around this because, again, the little guy doesn’t have the advantage of a quarter of a million of passive income or something like that. I mean, they may have a pension payment or something like that, but it’s nothing along the line.

[00:02:59] Lee Jackson: And you know in many cases if you’re a government employee, my brother was a teacher in California. And a lot of people that were like, so he was in calpers, I guess and he doesn’t really even get social security That’s all been, that all kind of comes through the pension fund for CalPERS or whatever.

[00:03:19] Lee Jackson: He was involved in the teachers union out there. and I asked him once, he said, I said, you don’t get social security. He goes, no, it comes through the pension fund. And I was like, wow. So yeah, it’ll be interesting to see. how they maneuver this, but I think you’re dead right. 62 will go to 64 for the earliest you can take it and the numbers will slide up probably like you said two years for every different class.

[00:03:43] Doug McIntyre: Here’s a warning to everybody in their late 50s and 60s. Be prepared to wait an additional two years, whatever your threshold was to get social security. Make some financial planning now and two years to what your assumption was. They’re going to have to save social security if they get to 2035, all buddy, everybody’s benefits dropped to seven, three, 73 cents on the dollar.

[00:04:09] Doug McIntyre: It’s not going to happen. They’ve got to have a solution. put some more money in your piggy bank because you’re going to need it. If you’re, in your late fifties, early sixties.

[00:04:19] Lee Jackson: And once that goes into effect, just wait until they start to tweak up Medicare and Medicaid, because that’s extremely expensive as well.

[00:04:28] Lee Jackson: And they’re going to start tinkering with that. I would suspect.

[00:04:33] Doug McIntyre: Well, you heard it here first or second or third, be very afraid about when you get social security.

[00:04:39] Lee Jackson: Yeah, I’d be concerned and I would try to make my investments pay out as much as possible and, just bank that money.

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