Social Security: Can my grandchild receive maintenance?
Learn: 10 Reasons Why You Should Require Social Security Early
Social Security’s investments work much like any traditional balance sheet. Each year, the total turnover is determined in the form of taxes taken out of our payslips every second week. Social security is funded through payroll tax dollars, and since 1982, a year before its last major bipartisan audit, the program has consistently brought in more revenue each year than it has paid out. From then until 2020, Social Security’s assets have increased from $ 25 billion to almost $ 3 trillion.
However, since the beginning of the pandemic, things have changed dramatically. An already aging baby boomer population and global pandemic was a driving force enough for one massive wave of redundancies and early retirements starting at the end of 2020. This sudden pressure on distributions was enough to deplete social security liquidity reserves so much that for the first time in history it is in the red.
What’s more, this rapid depletion is only expected to get worse. The board of the Social Security Board expects that Social Security’s liquidity reserves could be lowered to just $ 1.35 trillion over the next eight years.
This only underscores how important it is to have one’s own pension scheme in place and adhere to it as you begin to age. For millions of Americans who have already retired, monthly Social Security checks are theirs main source of income for basic necessities such as food, shelter and medicine. Without the assurance that social security will be solvent for future generations, it is crucial to have other sources of income – such as a 401k, IRA or individual brokerage account – to draw on when you retire. This will uncover the risk of a shaky social security environment, but also change your tax liabilities overall – not to mention take some of the enormous pressure off of sustaining yourself through your later years.
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This article was originally published on GOBankingRates.com: Social security fell by more than $ 31 billion for the first time in 40 years