Will the U.S. run out of Social Security?
- Maruti Maurya
- Oct 25, 2024
- 2 min read
The Facts on Social Security’s Future:
2033 Depletion: Social Security’s trust funds are projected to be depleted by 2033, leading to an estimated 23% reduction in benefits unless adjustments are made.
Reliance on Benefits: Almost 40% of retirees depend on Social Security as their primary income, making benefit cuts a significant risk for millions.
Rising Life Expectancy: Americans are living longer; the average life expectancy is 76 years for men and 81 for women, extending the years Social Security needs to support.
Inflation & Healthcare Costs:
With annual inflation, Social Security’s cost-of-living adjustments often fall short. In 2024, the average benefit is $1,827 per month, which may not be enough as inflation rises.
Healthcare expenses are estimated at $315,000 for a couple in retirement, with Social Security covering only a fraction of these costs.
Why a Diversified Retirement Plan is the Key
1. 401(k)s, IRAs, and HSAs:
Employer-sponsored 401(k)s, IRAs, and Health Savings Accounts (HSAs) offer tax advantages and allow investments that can outpace inflation.
2. Real Estate and Dividend Investments:
Investing in property or dividend stocks provides a steady income stream, creating flexibility and helping with inflation and unexpected expenses.
3. 7702 IRC Plans:
A 7702 plan is a tax-advantaged permanent life insurance policy that builds cash value, growing tax-deferred and allowing for tax-free withdrawals under IRS Code 7702. This can be an ideal complement to other retirement savings with no contribution limits, offering access to tax-free income that isn’t taxed like traditional retirement accounts.
4. Annuities:
Annuities can provide guaranteed income, supplementing Social Security and covering essential costs during retirement.
Social Security may not meet all future retirement needs. A diversified approach, including 401(k)s, IRAs, HSAs, real estate, 7702 plans, and annuities, can offer financial stability in retirement, regardless of Social Security’s future.
Comments