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  • 27/6/2025
Are you ready for major changes to Social Security? The trust fund is set to be depleted by 2033, meaning potential benefit cuts and other significant impacts. Learn what this means for your future and what you need to know now!
#SocialSecurity #BenefitCuts #FinancialPlanning

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00:00The Social Security Trust Fund is now projected to be depleted by 2033.
00:05This doesn't mean benefits will stop.
00:08But without legislative action, they face a significant cut of approximately 23%.
00:13Several factors have accelerated this timeline.
00:16The 2025 report from the Social Security Board of Trustees moved the depletion date up by a year.
00:22Rising health care costs and expanded eligibility play a role,
00:26as does the repeal of offsets under the Social Security Fairness Act, enacted on January 5, 2025.
00:33This law eliminated the windfall, elimination, provision, and government pension offset,
00:39providing significantly larger benefit payments for nearly 3 million Americans,
00:43including retired teachers and police officers.
00:46While beneficial for these individuals, it's projected to exhaust the Social Security Retirement Trust Funds sooner.
00:52We're also seeing an aging population, coupled with low birth rates, slower wage growth, and reduced immigration,
00:59all contributing less in payroll taxes.
01:02Social Security operates as a payezugo system, with current workers funding current beneficiaries.
01:07The ratio of retirees to workers has drastically increased,
01:11from about 18 retirees per 100 workers in 1982, 30 retirees per 100 workers today.
01:18Beyond the trust fund's depletion, other recent policy updates could affect your payments.
01:24Overpayment clawbacks have increased,
01:26with the default withholding rate for recovering overpayments jumping from 10% to 50%.
01:31The government has also resumed collecting undefaulted federal student loans,
01:35with garnishment of federal benefits, including Social Security.
01:39Beginning in June, this could affect an estimated 452,000 Social Security recipients aged 62 or older.
01:47You should also be aware of taxes on Social Security benefits.
01:51Federally, up to 85% of your benefits could be taxable,
01:55if your combined income exceeds certain thresholds.
01:58These thresholds haven't been updated for inflation in over 30 years,
02:02leading more retirees to face federal taxes.
02:05Additionally, nine states still tax a portion of resident Social Security benefits depending on income.
02:11West Virginia will eliminate this tax starting in 2026,
02:15while delaying benefits until age 70 maximizes.
02:18Your monthly payment increasing by 8% for each year.
02:22You delay after your full retirement age, claiming early might make sense.
02:26If you have immediate financial needs or don't expect to live long,
02:29the looming uncertainty is already changing behavior,
02:32with a 13% surge in early Social Security claims.
02:36Policymakers have several options to ensure the program's solvency,
02:40including raising more revenue by increasing the payroll tax rate or lifting the income cap,
02:45adjusting future benefits by reducing them for high earners or raising the claiming age,
02:50broadening the contributor base through increased immigration or birth rates,
02:55or reallocating funds.
02:56Whether your benefits will be cut depends on future legislative action.
03:00You can also create a free online Social Security account at ssa.gov
03:04to stay informed about your benefits.
03:06Always consider your personal health, financial needs,
03:10and longevity expectations when making decisions about when to claim Social Security.
03:16Given this complex and evolving situation,
03:19it's highly recommended to consult with a fiduciary financial advisor for personalized guidance.
03:24Money explains.
03:25Money explains.

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