If you’re worried about the future of Social Security and Medicare, you’re in good company. Both programs are essential to the financial and physical wellbeing of millions of retired seniors today. And both programs are facing a massive funding shortfall that lawmakers desperately need to address, and soon.
But thankfully, President Biden has made it clear that he’s committed to shoring up both programs. And that’s something to take comfort in, whether you’re already in retirement or are decades away from closing out your career.
Benefits workers have earned
During his February 7 State of the Union Address, President Biden made it abundantly clear that he’s not about to back down on his efforts to strengthen Social Security and Medicare. “Those benefits belong to the American people,” he insisted. “They earned them.”
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Workers pay into both Social Security and Medicare via payroll taxes. But in the coming years, as the workforce is expected to shrink due to a mass retirement of baby boomers, both programs could face a serious funding shortfall.
Biden has talked about imposing Social Security taxes on workers with incomes of over $400,000. Right now, wages beyond $160,200 are not taxed for Social Security purposes.
But lawmakers have floated other proposals through the years, too. These include raising full retirement age for Social Security purposes (which currently sits at 67 for anyone born in 1960 or later) and increasing the payroll tax rate for both Social Security and Medicare.
Now at this point, lawmakers really need to prioritize Social Security and Medicare before cuts to both programs become inevitable. But thankfully, Biden seems quite invested in preventing those cuts.
As he said himself, “Social Security and Medicare are a lifeline for millions of seniors. Americans have been paying into them with every single paycheck since they started working. So tonight, let’s all agree to stand up for seniors. Stand up and show them we will not cut Social Security. We will not cut Medicare.”
Biden then went on to say that if any lawmakers attempt to cut Social Security or Medicare, “I will stop them.”
Planning around Social Security and Medicare cuts
While it’s clear that Biden is committed to Social Security and Medicare, the reality is that workers should set themselves up to be less reliant at least on the former. Even without benefit cuts, Social Security, in its current form, is only designed to replace about 40% of the average worker’s pre-retirement income. Most seniors need a lot more money than that to live comfortably, so focusing on independent savings is crucial.
But all told, the one thing current and future retirees should take away from President Biden’s messaging is that he’s going to do everything in his power to ensure that Social Security and Medicare are here to stay. And so those in the process of planning for retirement need not write off those programs anytime soon. A better bet is to assume they’ll be around, but to save, save, and save some more to ensure a comfortable retirement alongside them.
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