Create an Estimate Bill Format for Security Effortlessly

Estimate bill format for Security

a huge change is coming to Social Security it just passed the Senate it's now headed to President Biden if he signs it it's going to drastically increase benefits for an estimated 2 million retirees and correct one of the biggest problems with our retirement system it's also going to cost an estimated $200 billion and make Social Security run out of money even faster I'm going to break it all down for you today so a bill called the Social Security Fairness Act just passed the Senate it already passed the house last month so all that's left to put it into place is for President Biden to sign it into law it would do away with the government pension offset as well as windfall elimination provision and that means boosting Social Security benefits for an estimated 2 million Americans for some folks they say this would be an increase of up to $550 per month and it would actually be paid retroactively all the way back to December of 2023 which means that basically a bonus check would be on your way for a year plus of the previously penalized benefits as well as a new larger check going forward the details of exactly how all of this will work are still to be determined but here's what we know so far those two Provisions I talked about they affect two different types of people here first are the people who paid into a government pension system that didn't also participate in Social Security but then they worked a private sector job long enough and paid into Social Security that way to qualify to receive Social Security benefits even though those those folks paid into both systems they have their social security benefits reduced right now through something called the windfall elimination provision now I've covered in detail what this is on the channel before but basically you wouldn't receive your full social security benefit if you also earned a government pension that was part of a pension system that didn't pay into Social Security so this affected loads of teachers police officers firefighters public sector employees these folks all were impacted now let's say for example you were a firefighter who started the fire department at age 22 and you needed to work 25 years to get a pension so you did and you retired from the fire department at 47 and you went and you got a job working for a local business and you work there for the next 18 plus years so now you're paying into Social Security and then you retire at 65 guess what you aren't going to receive your full fire pension and your full Social Security benefits or at least you weren't going to receive them assuming this gets signed into law you would now get both full benefit benefits as windfall elimination provision would disappear the second type of person and I see this one even more often that's impacted by this let's say that you're married to a teacher who paid into one of these State Retirement Systems and you worked in the private sector and paid into Social Security fast forward to retirement let's say that their pension $7,000 a month and your Social Security was $3,500 a month and you needed $9,000 a month to live on you were in really good shape as long as one of you didn't pass away you had 10,5 $0000 a month coming in and you only needed 9,000 to live plus hopefully you got your pile of money under the old rules something called government pension offset if either of you passed away the pension check would basically eat the social security check and it would disappear and now all of a sudden instead of $10,500 in monthly income guarantees you immediately drop to $7,000 this created a huge hole in a lot of retirement plans and required some specialized planning for those that it affected and again if this be comes law that just goes away it's gone now both of those checks would be able to continue even if one of you passed away as I've talked about here on the channel before these rules Were Meant to safeguard the social security system and they were put in place like 40 years ago but like lots of things with the government even if the idea was solid the execution was lacking as a result you had huge negative impacts to lots of people and their retirements over the years I can't count how many conversations I've had about these two things now imagine the situation where you're married to somebody and they work for 30 or 40 years they pay into the social security system and then they pass away and you receive zero survivor benefits just cuz you chose to be a teacher or a police officer or a firefighter it I know life's not fair it literally isn't fair that this is how this thing worked now while it's a win for a lot of Americans both those working in non-participating public pension systems as well as their spouses it obviously comes with the cost that cost for the Congressional budget office is going to cost $196 billion billion with a B over the next 10 years now as you are no doubt aware the Social Security System already has some problems it's already on its way to insolvency throwing another 200 billion logs on the fire isn't going to help things as a result of this law the insolvency is going to get here even sooner the last estimate is that Social Security is going to run out in 2034 this will speed things up about 6 more months I've highlighted before that in its early years the Social Security System had 42 workers paying in for every one person pulling a benefit out that number is down to three now there are three workers paying in for every one person that's pulling a benefit out of the system and it's expected to drop to 2 to one in the next 20 to 25 years hey while you're watching today don't forget to look down below I dropped links down there to some of our best stuff we've got a couple of retirement guides down there including our social security guide go ahead take a look down below you'll see for yourself now back to the future of the social security system this isn't going to be the last change that we see Congress can't afford to just stand Pat too long on Social Security as is like I said the last numbers say that Social Security is going to run out in 2034 and it would only be able to pay about 74 cents on the dollar of every benefit that it's supposed to without some sort of change now I can't fathom a circumstance where a change isn't made my guess is that this comes either in the form of a higher full retirement age they're going to make people work longer and this would be a change for younger workers not for anybody that's too close to retirement right now but doing so would allow the system to pay Outlast money which would help things and push down the road the amount of time we'd have until the system became insolvent another option is raising the Social Security wage cap presently it's around $168,000 and what that means right now is that you pay 6.2% of your income up to that $168,600 cap your employer also pays in 6.2 of the same dollar amount into the system after that level you're not paying any more money into the system you don't get any larger of a benefit out when you retire but you've maxed out if that cap were raised meaning you continue to pay taxes into Social Security beyond that $168,600 more money would come into the system which would push back the insolvency dates I did a video about this earlier in the year as well breaking down all the details uh they say this will help push the bankruptcy date the insolvency date for Social Security down the line to 2054 basically buying 20 more years of time now there are some other options on what could be done as well as I said I broke it all down in a video earlier in the year I'll link that in a minute but before I do I want to talk to those folks who this legislation would impact if you're going to receive a government pension in retirement or you're married to someone who will or you're already retired and receiving one of these benefits you need to get in touch with your financial adviser as soon as possible and ask him to review your plan with you there's a chance that this changes your retirement math meaningfully either allowing you to retire earlier than you thought freeing up additional cash or maybe reducing the risk you have in retirement by raising the level of guaranteed income that you have coming in I can tell you that I'll be watching this closely in the coming days and if it does get signed into law we'll be contacting our clients early in the year to review how this changes things for them for now if you're one of those Public Service workers your holidays might have just gotten a little bit better keep an eye out and find out how this change might impact your retirement