Thinking about the future economic stability of Social Security is totally uncertain. Any small change that occurs in the United States can cause the system to have to change completely. For that matter, the entire pension system can change in a day. At present, the forecasts do not look good, as it is believed that by the year 2035 Social Security Administration will not have money to pay all pensions, although the situation could still change.
In this sense, millennials could see their future and their retirement in danger. This generation will directly have a lowering of their Social Security due to the current lack of funds. It can still be fixed, yes, but the United States Government and Congress must do many things and take many steps to avoid disaster. If nothing changes, an entire generation will be in trouble in just over 15 years.
How do Social Security cuts affect millennials?
The cut that may occur in Social Security pensions for millennials is 20% of the total. To compensate for this, a millennial will have to save part of his or her salary for a long time. The problem comes when not everyone can afford to do this. If we are talking about people with low salaries, it is possible that this situation cannot happen. With this in mind, it is true that any savings will be fine for the future.
The key is to start early. If you started working at age 35, adding a little extra to the 401(k) plan can ensure that your retirement is better off. The Social Security pension is calculated through payroll, so you’ll receive your benefit based on the money you’ve earned while working. Knowing this, you can think about the savings you will need to have to live in peace in retirement.
Delaying retirement is another possible option
Another option Congress could consider is delaying Full Age Retirement (FRA). Not long ago this option was already done, moving from age 65 to age 67. Now the FRA could go up to 69. All this is just a guess, but in 2000 this decision was made, so it could happen again. From Barron’s they point out that this move is possible, although there is nothing certain yet to support it.
Therefore, millennials could find themselves in trouble in a very short time if no action is taken. Even so, Congress still has time to make its moves so that Social Security does not find itself in future financial trouble. Retirement for workers is a very important right that we all need to be able to access without problems. All workers deserve a retirement rest.