Each year the Social Security Trustees publish a report on the financial health of the fund. The 2021 report indicates the retirement benefit and survivors’ benefit (technically called the Old-Age and Survivors Insurance) can make timely payments for 11 more years to 2033. Previous reports had funds available through 2034. Once the fund is depleted, Social Security will be able to pay 76% of scheduled benefits since it is still collecting Social Security taxes on wages.
In the past, Congress has made changes to the Social Security rules to improve the health of the program. If history repeats itself, here are a few of the many historical changes that may be implemented again.
- The tax rate was increased over time along with the amount of wages that were taxable.
- Delayed retirement credits were increased to 3% to encourage taxpayers to work longer and delay starting benefits.
- Reduced spousal and survivor benefits by the amount of government pension.
- Increased the full retirement age from 65 to 67 over time.
- Accelerated the scheduled tax increases.
- Higher income recipients paid tax on up to 50% of their Social Security benefits.
- Delayed retirement credits were increased from 3% to 8%.
- Increased the amount of Social Security that is taxable from 50% to 85% for higher income beneficiaries.
- Removed the incentive to not work by allowing benefits to be paid to workers over full retirement age. Previously, workers would have a portion of their benefit withheld while working.
If history is any indication, physicians and other high earners may see increased taxes and delayed or decreased benefits for Social Security in the future as Congress could amend the program again. However, these changes are usually phased in over time, so younger physicians would be impacted the most.
Want help with your Social Security claiming strategy? Download your free guide on timing Social Security or schedule a meeting.
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For personalized help eliminating debt, investing smart, and securing retirement, please contact Mark Ziety, CFP®, AIF® 608.442.3750.
Mark Ziety, CFP®, AIF®
WisMed Financial, Inc. part of the Wisconsin Medical Society.
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