This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Social Security Cuts Loom Large

NEW YORK ( MainStreet) -- A large block of future retirees can expect to see their Social Security benefits dwindle by 19%, thanks to a 29-year-old piece of legislation that curtailed government retirement benefits. If the feds don't find other ways to shore up the pension system, it means bad news for millions of Americans under 50.

There's no doubt Social Security is in big trouble financially. According to the Congressional Budget Office, Social Security coffers are expected to run dry by 2037, and this year alone the U.S. government will collect $45 billion less in taxes than it shells out. By 2016, Social Security is expected to fall permanently into deficit mode, so it's no surprise future beneficiaries may see their Social Security cut.

With benefit cuts becoming the norm, the future looks bleak for millions of Americans under 50.

A new study by the National Academy of Social Insurance estimates that some cuts have already been locked in, thanks to changes in Social Security's payment structure that date back to the 1980s. Americans born after 1960 have been staring down the barrel of a 19% benefits cut, and that could just be the beginning. If Congress doesn't pare benefits across the board, the study argues, future Social Security beneficiaries could be in even bigger trouble.

"Social Security benefits are already being cut more than many people realize," says Virginia Reno, NASI's vice president for income security. "Cutting benefits further is not necessary to preserve Social Security for future generations. Other alternatives merit consideration by policymakers."

That's what Congress did in 1983, and it must take similar action again, NASI says. Back then, Congress took steps to ensure the solvency of the nation's most widely used retirement savings program, raising the full-benefit retirement age from 65 to 67, a change that results in a 13.3% reduction in benefits, taxing part of benefit income, which results in a 5.1% benefit cut, and delaying the cost-of-living adjustment by six months, resulting in a permanent 1.4% cut.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $114.62 -3.20%
FB $94.13 -0.01%
GOOG $630.69 -0.08%
TSLA $266.01 2.30%
YHOO $37.14 1.20%

Markets

Chart of I:DJI
DOW 17,531.35 -66.85 -0.38%
S&P 500 2,093.61 -4.43 -0.21%
NASDAQ 5,107.7950 -7.5870 -0.15%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs