For decades, people across the US have been cashing Social Security checks each month. But if the latest estimates are true, your retirement will look a little different. Next year, Social Security income won’t fully cover the program’s costs, and it’ll have to fall back on its safety net trust fund. By 2035, that trust fund will be empty, too. Here’s what that means for your wallet:
Taxes could go up. Your tax dollars already pay for Social Security. If you’re a regular employee, you and your employer kick in about 6% of your income, up to a max of around $130,000. (If you’re self-employed, you pay more. Sorry.) One way lawmakers could help cover the Social Security shortfall is to increase those numbers. Dems in DC have already suggested raising the max taxable income, specifically targeting people who make over $400,000.
You’ll need to invest more. A depleted Social Security trust fund doesn’t mean you won’t be getting any gov money during retirement. But it does mean those checks will likely be smaller than you expected. So you’ll have to invest more of your own money to make up the difference. Bingo nights don’t pay for themselves.
theSkimm: No matter what, it’s on you to build the financial future you want. If you haven’t already, sign up for your company’s 401(k) and try to get the match, if they offer it. That’s free money. Or open an IRA (stands for Individual Retirement Account) to invest on your own. Then hands off until retirement. Not only are there penalties for accessing the money too soon, but spending it now means you won’t have it when you need it.