Last week, CNBC hosted a Twitter Space titled “Will Social Security always exist? What you need to know” to discuss the future of Social Security and the impending insolvency of the trust fund. CNBC reporter Greg Iacurci spoke with David Blanchett, head of retirement research for Prudential Financial’s asset management arm PGIM, and Doug Boneparth, a certified financial planner and founder of Bone Fide Wealth.
The Twitter Space participants talked about the future of the Social Security retirement program and its upcoming insolvency in 2033. This insolvency means the program cannot meet the promised benefits of retirees, and beneficiaries will see a 23% cut in monthly benefits. Blanchett stressed that the program will not go away when insolvency occurs, but retirees will face cuts if nothing is done, and that “there are going to be losers.” Blanchett suggests that current and soon-to-be-retirees are the least likely to be affected, but “younger Americans, if you’re maybe in your 40s, should count on a lower benefit.”
Doug Boneparth said that younger clients want to see the scenarios where benefits are reduced, “our firm’s default presentation when we’re doing financial planning deliveries is to show anywhere from a 50% to a 100% reduction in Social Security benefits.” While Boneparth doesn’t believe the program is going away, he does want younger clients to be ready for “the worst that could happen.”
In a back-and-forth discussion with Iacurci the two looked at what seems to be a common long-term solution to insolvency, “What you’re saying is essentially, you can’t count on your full benefit being there, so maybe it’s wise for people to sort of assume, if you’re younger anyway, that there might be a partial benefit cut?” Boneparth replied, “I don’t think it’s out of the realm, I mean, you can look to the past in terms of what has taken place to extend benefits to the program or keep funding in line, and it has particularly been around the retirement age … I would not be shocked to find by the time I’m retired, I’m 38, for full retirement age to be 68 and 69 and I wouldn’t be shocked if the excuse for that is that we’re running out of money and oh people are living longer and want to work more, but I don’t think they want to work more.”
Tell us in the comments what you think about Social Security insolvency and ways to protect future generations from seeing drastic benefit cuts.
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