As baby boomers age toward retirement, many are finding their financial outlook a little more uncertain than expected. For years, Congress has been debating cuts to the Social Security program that could reduce or eliminate certain services and benefits that many boomers rely on.
In this article, we discuss potential cuts to Social Security and look at some programs and services that can provide much-needed assistance. With so much uncertainty surrounding the future of Social Security, now is perhaps more than ever before to understand these proposed changes and plan accordingly.
reduction in social security
It’s no secret that Social Security is underfunded. If nothing changes, the trust fund that Social Security is drawing down will be depleted within the next 10 years. That means Social Security won’t have enough money to pay retirees their full benefits.
He is a partner at Carson Alalia Wealth Management andPower hour after retirement“At that point, income from Social Security will only be enough to cover 77 percent of scheduled benefits by 2097.”
“Given the magnitude of Social Security’s impact on so many Americans, it is highly unlikely that benefits will be cut by 23% across the board,” Alalia added. But the longer we wait to address this obvious problem, the harder it will be to fill the necessary gaps. ”
Several proposed solutions are discussed to address this issue. This includes reducing Social Security benefits and raising the full retirement age. Raising the full retirement age won’t affect most boomers, but reducing benefits could because they’re already at or near retirement.
Nothing has been decided yet, so at this point, cuts and adjustments to Social Security have just been proposed.
Adjusting the cost of living
Although not a reduction, cost-of-living adjustments (COLAs) affect the amount Social Security recipients receive. Social Security increases its benefits each year based on the COLA, which is based on increases in the cost of living as measured by the Consumer Price Index. The COLA in 2024 will be 3.2%. COLA in 2022 was 8.7%, the largest increase since 1981.
The COLA is based on inflation for the previous year’s third quarter (July, August, and September). This year’s calculations show that inflation was high in the first two quarters, but slowed by the third quarter thanks to interest rate adjustments by the Federal Reserve. But some may have fallen into debt during the months of rapid inflation. If COLA increases are smaller, it may be harder for retirees to repay debts incurred during that period. The 3.2% increase may not keep up with inflation today or in the coming quarters.
Programs and services for baby boomers
If you’re struggling with money during retirement, there are several programs and services you can consider. These programs help with food, medical expenses, and employment.
Supplemental Nutrition Assistance Program
The Supplemental Nutrition Assistance Program (SNAP) provides food benefits to low-income Americans to supplement their grocery budgets. You must qualify based on your income and assets. Households with elderly or disabled members only need to meet the net income limit, which is gross income less allowable deductions.
From October 1, 2023 to September 30, 2024, the SNAP net monthly income limit is $1,215 for a one-person household and $1,644 for a two-person household.
If you’re eligible, you can receive your SNAP benefits on an electronic benefits transfer (EBT) card, which works like a debit card. Rewards are automatically loaded into your account each month. You can then use your EBT card to purchase groceries at authorized food stores and retailers.
Commodity supplement program
The United States Department of Agriculture operates the Commodity Supplemental Food Program (CSFP). Certain low-income people age 60 and older are eligible to receive a monthly food package that includes vegetables, fruit, cheese, grains, protein, milk, and more.
medicare savings program
Medicare Savings Programs help pay for Medicare Parts A and B premiums, deductibles, coinsurance, and copayments for eligible beneficiaries. You apply for Medicare Savings Programs through your state, and the state determines which programs you qualify for.
To qualify, your income and assets must fall below certain limits. There are four Medicare savings programs: the Qualified Medicare Beneficiary (QMB) Program, the Specified Low Income Medicare Beneficiary (SLMB) Program, the Qualified Individuals (QI) Program, and the Qualified Disabled and Working Individuals (QDWI) Program.
Senior Community Service Employment Program
If you are struggling with money in retirement and have no disability, you may be able to work part-time. If you’re affected by cuts, part-time work can help supplement your Social Security income. The U.S. Department of Labor administers the Senior Community Service Employment Program. This helps subsidize part-time employment and training in social service jobs so that older workers can move into unsubsidized private sector jobs.
conclusion
Retirement should be a relaxing time, but finances can be a source of stress. If money is tight, check out one of these programs and services. It may help alleviate some of the financial burden you feel after retirement.
Araria said the best thing to do now is to plan for the worst-case scenario, in which benefits are cut by 23% in 2033.
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