Social Security Trustees Report For 2024

Hi, this is Roy Jones with ManTalk Radio Podcast. Our mission is to break down the walls of race and denomination. Your chosen Truth Radio Broadcast will be starting in just a few seconds. Thank you. Welcome to Finishing Well, a certified financial planner, Hon Shyle, and today's show is the Social Security Trustees Report for 2024.

It's in and, as usual, it's better news than we think. When I think about what I usually hear about these kind of things, I think about all the rumors that we hear that Social Security is going broke and this, that, and the other. And so, along those lines, interesting, clear early in the Bible, long before you get to even the book of Psalms, you find Leviticus says, Thou shalt not go about and down, up and down, as a tail-bearer against thy people. And so, when you start to tell stories where you really don't have all the information, or you don't really grasp the information, or you can tell from where you got the source of your information that this wasn't necessarily coming from someplace reliable, then you take part in that tail-bearing, and so much of what's talked about when it comes to the Social Security Trust Fund is tail-bearing, right, Hans? Well, it is, because the people that are commenting, even if they're Congress people, they don't have a clear picture of what's really going on. I mean, taxes or income taxes don't pay Social Security benefits, or it is actually against the law for the federal government to borrow to pay Social Security benefits, okay? And so, they don't borrow to pay Social Security benefits. There's such thing as the Social Security Trust Fund. And the Social Security Trust Fund right now has just short of $3 trillion, okay? And when you get into the trillions of dollars, you got four commas in there. So it's 2,788,500,000,000. That's like money in the bank. It's invested in government, U.S. government bonds. They got almost 3 trillion bucks. It's 2,788,000,000,000,000, or almost 2.8 trillion.

And that's money in the bank. And what you read in the headlines of this stuff is that's projected to go broke or be out of money in 2034, okay? And 2034 is 10 years from now. And I think if you read in deeper, it might be as much as 2035, depending on how you're looking at it, but not to split hairs here. And it means that the Social Security Trust Fund or the Social Security Administration has 2.8 trillion in the bank. And they gnawed away at it a little bit last year. So I want to show you how, and this is the report came out in 2024. I read it every year.

And I just pulled out of there seven critical numbers, and one of them I just gave you. Now, if we look at the year of 2023, paid out to beneficiaries in Social Security checks was $1,384,000,000,000,000, okay? So about half the size of the trust fund was paid out in Social Security checks.

But it wasn't paid from the trust fund. It was paid, I'm going to give you how they make money, but so the big expense that they have is paying the Social Security checks, almost $1.4 trillion in Social Security checks that went out. Now, they have to pay their own administrative expenses, and that's $7,200,000,000,000. So Social Security Administration pays its own bills. They pay for all the Social Security offices, all those people, all the computers, that's about all the bureaucrats. They pay the bills, and they pay it out of revenue. Now, and that's really all they have is they pay benefits and they get expenses. Now, how do they make money?

How do they bring in revenue? So the payroll tax is collected from you and I, Robbie, and everybody, that 6.2% of each paycheck goes to the payroll tax. And then your employer pays 6.2%. So that, they collected almost enough to pay all the Social Security benefits. They collected $1,233,000,000,000. So I know I'm using huge numbers, but when you start commenting on things, you really have to have a grasp of the numbers.

That's the point I'm trying to make here, and I'm going to get to a conclusion. I've been through four numbers, but payroll taxes are close to enough to pay the benefits in 2023. Now, they also, for revenue, they received $66,000,000,000,000,000 in the trust fund. So all those bonds that are sitting in there of the almost three trillion dollars, they are an interest. And that interest goes to pay benefits in Social Security checks.

Okay? Now, we've gone over in several shows the taxes that higher income people have to pay on their Social Security. And, you know, we've got all kinds of strategies to lower that. But when it's all said and done in 2023, well-to-do people paid $49 billion in taxes on their Social Security benefits. And that money goes straight into the trust fund to pay benefits. So they had a deficit last year in 2023 of $41 billion. So that's a lot that was taken out of the trust fund.

So the trust fund went down by $41 billion. If it hadn't happened, they'd have a little bit more than they do. So the problem is not as massive and as critical as it's made out to be in the news stories. Are you able to grab onto that, Roddy? I'm trying. I'm trying.

Because when you use those creepy huge numbers, you're trying to grasp it. But essentially, if I understand what you're saying, that with all that they are, you know, their normal income, which comes out of everybody's Social Security, that they pay every month out of the paychecks of the people that are not yet on Social Security yet. So all that money that all the younger people are essentially paying in is enough to cover all the benefits that are paying out every year up until for the first time last year, it sounds like. It wasn't the first time last year, but it was the first time the last three or four years. Okay. So for the last three or four years, they hadn't had to dip into the trust fund.

Essentially, the trust funds, they're just like their big savings account. Right. And they didn't ever have to dip into that for the last three or four years.

But now they did. But from a percentage standpoint, it was a rather, even though it was a huge number, from a percentage point, it isn't all that large. And of course, there's nothing there on the front. If I'm just giving you the overall view of it, there's nothing there that would raise up the red flag like this thing's going broke in the next couple of years. But it does throw up a flag to say, okay, they're probably going to change some taxes in order to make sure that it doesn't continue on that trend.

Well, I mean, that's a good conclusion that you drew, but that's not what the conclusion that the people who write the articles that are crying wolf are saying. Okay. They are saying this thing's going to go broke in 2034. Okay. I mean, the whole $2.8 trillion is going to be spent.

It's going to be gone. Now, what I'm saying is I'm not going to argue with that because it gets into arguing with action. It's not going to get us anywhere because they know more about their numbers than we do. I'm just trying to show you that we had a deficit of $41 billion last year.

That's it. I mean, that's some Social Security. And the Social Security is bound by law to keep all their money in their own little kitty and to pay all their own bills themselves. And the only tax that they get is a big one.

It's that 6.2% on your payroll and that your employer has to match. But it's almost enough to pay all the benefits. So we were short $41 billion last year, and that's a problem. It's also a problem that we're not adding to the trust fund. I mean, to extend it out way beyond 2034, instead of taking money out of there, we need to be putting more money in there, okay?

So I'm not trying to say there isn't a problem. I'm just trying to give you a few numbers to back up what I'm saying and not just take a wild conclusion out of things. And again, I could be all wet, but don't they also get income from the folks that took their Social Security early and if they got to pay tax or even me that I'm paying a small amount of tax on my Social Security benefits because I'm still working, that goes back into paying their income as well, right? Yeah, it was $49 billion last year that went right back.

You had a small piece of that. So why I'm not getting my Social Security yet, but when I do, I'll be paying taxes on it. And that was larger than the amount they dipped out of the trust fund. So yeah, they got three sources of revenue.

Number one is the payroll tax, which is the biggie. They got interest on the bonds that are sitting in the trust fund, and that's $66 billion. And then they get the taxes that are collected on the Social Security benefits from the high-income people. So, okay. Yeah, exactly.

And so they have all those. And then in spite of all that, they still dipped in a little bit into their essentially trust fund, which would kind of be like their emergency account. And now looking forward, you know, how should we affect, you know, essentially what's our next step?

Well, that's what we're going to talk about in the second part of the show. And we, you know, we don't need to be dipping into this account, and we are. We need to be adding to this account because there's more and more young people working and populations growing. And so we need to get more than 10 years of cushion, I guess is what I'm trying to say. And I'm going to talk about like what they did, what the government did back in the 1980s when they were facing a similar problem with a few less zeros, but it was still conceptually the same thing, what was done to get us moved ahead 40-some years. And then I'm going to talk about what I think we ought to do now and the government ought to do now. And some of this is just not pretty, but so I'm all for that we need to fix this and we need to address it. But I'm refuting a lot of the press that you read in a lot of the way that is just the alarmist stuff that's going on out there.

All right. So again, as I always want to remind you that the show is brought to you by Cardinal Guide, cardinalguide.com. If you go to cardinalguide.com, you're going to see the Seven Worries tab. And of course, today we're talking about Social Security. And so you've got all sorts of information, including a wonderful video that's there under that tab. And it has show notes, all kinds of charts and stuff. If you want to actually look at the Trustees Report, it's all there at cardinalguide.com, as well as Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. And of course, to all the contact information to get up with Hans, it's all there at cardinalguide.com. So when we come back, we got solutions and a good time to do this in an election year.

We'll be right back. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with certified financial planner Hans Scheil. And today's show is the Social Security Trustees Report for 2024. So we heard all about the concerns in the beginning of the show. Now we got some answers, right, Hans?

Well, we do. And it's just I went through all those what can be boring numbers. It's just not really exciting to go over numbers.

And I do that because when I hear somebody saying that we've got problems and Social Security checks are going to go away or they're going to get reduced, or I hear clients coming in, there's no point in going over that now because this thing's all going to be out of money. And they're getting all this from the press, and I don't think the press has done the homework. I mean, I don't know if they're capable of doing the homework. So if you go over to the video on the website about the Social Security Trustees Report May 6, 2024, it is going to attach to that is a 280-page report of the Treasury Department making a report to the government, to the Congress. And I'm not suggesting you read that report by any means because it's not very interesting.

But I did. And I read the report and I pulled out those numbers as just the conclusion that they're not totally accurate and they're alarmist stuff. 2034 is 10 years away. We still have almost $2.8 trillion in the bank at the Social Security Trust Fund. And now is the time to start doing something about it, not to wait five years or seven years or eight years.

Then we will be in an alarm situation and we may not be able to fix it. So first I want to talk about we were in a similar situation in 1983. And the government, we were in a similar situation in 1983 and a bipartisan commission was formed. And they fixed it.

And what they did, they did three things. They raised the minimum age or the retirement age for Social Security from age 65 to age 67. And so that's not fully implemented yet and it's 2024. So it's 41 years later. And I turned 65 last year and my full retirement age is 66 and eight months.

So in a couple, three years, this 41-year plan will be fully implemented. And, you know, you could say if you're cynical, well, that got us to where we are today. Well, if they wouldn't have done this, we would be in a much worse situation than we were today. And so they moved the retirement age two years, which had a lot more people delaying collecting their Social Security. Just a couple of years before they had to pay out the same benefits. And that was done because people were living longer in the 1980s and 1990s compared to when Social Security came out in the 40s and 50s. There were a lot of people dead by 65.

And Social Security didn't have to pay anything. And, you know, 40 years ago, they said, we've got a problem. People are living too long. It's one of the problems.

And now it's even greater. I don't know if you call that a problem, but people are living in their 80s and 90s and collecting and past 100. And they're collecting checks for much more than they anticipated. So anyhow, they moved it from 65 to 67 and they phased it in over 40 years.

Okay. So the next thing they did is they started taxing Social Security benefits for high income people. So if you were middle to low income, you didn't have to pay taxes on your Social Security benefits.

But if you were what they define as a high or higher income person, and there's a formula, we do other shows on that. You've got to pay tax on some of your benefits. And that was another way to raise money. And they, last year I gave in the numbers, they collected almost $50 billion in taxes that they put right back into the trust fund. So and then they raised the payroll tax to 6.2%. And I'm not going to quote what it was before then, but it was quite a bit less.

So this is how they fixed the problem. And it moved Social Security ahead 40 years. Yeah, I'm sure this was not politically popular. That's why they had a bipartisan commission. But anyhow, they did it. It was under Ronald Reagan.

And so I guess if anybody gets to take credit, he does. So with all that done 40 years ago, what can we learn from that? What do we need to do now? And so my suggestion is, if you know, they put me on this commission, is we need to raise the retirement age again. And we need to implement it over a lot of years. We don't need to raise it on the people that are 67 now. We just need to raise it on the people that are 30 now. And we need to say, you can't get full retirement benefits at 67. You're going to have to wait till you're 69.

Okay? And that would do wonders to this projection of the thing running out of money, because that's where all the reserve is, is for those younger people. So what exactly that number is, whether it's 67 to 68 or to 69 or to 70, we need to do what worked before and do it again and have a delayed phase-in. They need to raise the payroll tax from 6.2% to something more. And again, I'm going to leave that up to the people that do the math. And even in this report, there are some solutions, and there's another report behind the video where they actually get into this a bit and show that if you did this, and who wants to raise taxes? Who wants taxes raised on them?

Nobody. But it's going to have to be done, and I'm not so sure that it's going to take that gigantic of an increase in percentage to have a profound effect. Okay? Yeah. And boy, we're glad they did it. Those of us who are on Social Security, again, for those people who are actually retired, I mean, this thing is critical to being able to move forward into retirement. So it may look a little bit painful at the time that you're actually paying the taxes, but when you've got that income, you know, it seems like what was set up years ago was genius to me.

Well, yeah. And when the whole Social Security was set up, you know, like I said, not a lot of people lived to 65. Or if they lived to 65, they didn't live that many years past it. And then, you know, sure, you had some people making it to 80 and 90, and those were the outliers, and Social Security paid them a lot of checks.

But moving ahead to the 1980s, you had a lot of people making their 80s, you know, and they had to come up with the money from somewhere, and so they, you know, they did three things. They raised the retirement age from 65 to where it's soon going to be 67. They increased the – they put taxes on the higher income people, and then they raised the payroll tax above 6.2%.

And what do we need to do now? Well, we can't put more taxes on the Social Security benefits. We might as well just take it away from high income people. So I'm going to say that that is already producing $50 billion a year for the Social Security system, but I think they need to raise the retirement age, increase the payroll tax.

And the third thing that can be done is they can make the payroll tax go above the maximum of $168,600. So I don't want to get into too much teaching about how all the Social Security works, but, you know, I don't really like that just personally. I mean, I want to keep my taxes as low as I can. I don't like the government squandering our money. But this is Social Security that we're talking about here, and this needs to be saved.

And it's a bipartisan deal, and I'm hoping that the next administration and the next Congress will take this stuff seriously and have the courage to come up with a solution, either doing the things I suggested or something else I haven't thought of. So the other thing, you know, clearly to me, you know, people are living a lot longer than they did in the 80s as well. And so, you know, it makes perfect sense to raise it up. You know, maybe even another extra year, because so many people to me don't really seriously think about retiring until they're in their 70s. Well, I think that's right, because being in the 70s now is very much like the 50s was, you know, back in the day.

I mean, you know, back when Social Security came about, and I would say it's very much like the 60s were in the 1980s. It's just people are working longer. I don't plan to stop until my health would change.

I just don't. And I'm not really going to need these Social Security checks as long as I'm working. I've paid in a ton over the years, as you have, and I'm certainly going to take them.

And I'm going to have to take them for my wife to get a check, because she's going to come in on mine. But just raising the retirement age for the people that are in their 20s, 30s, 40s now is just not that big of a deal, I don't think. And then to leave it like it is for people in their 50s and 60s, because it's a little late for us to make adjustments, you know, in our plan, that just makes sense. Yeah, and I, you know, again, this being an election year, it's a good thing to, you know, consider when you're looking at those candidates. Have they made a statement about what they might do about Social Security?

And are they willing to make, you know, tough decisions that aren't necessarily all that popular, but it's the right thing to do? So we just need to consider holding the politicians accountable, and we need to ask questions about this, and it needs to get into the press. Not that Social Security is running out of money, it's just like, what are we going to do about this? We want to remind you that this show is brought to you by Cardinal Guide, cardinalguide.com, and there you're going to see, when you get to cardinalguide.com, the Seven Worries tab, and at the Seven Worries tab, today's show is on Social Security, so that would be the tab. And there is a wonderful video there with show notes, you know, a copy of the trustees report all there at cardinalguide.com, as well as Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, and of course the contact page. Wonderful stuff if you need a friend or a resource. It's all there at cardinalguide.com. Great show, Hans.

Thank you, and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own, and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk, and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Whale, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement, and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Whale radio show on the website and send us a word. Once again, that's CardinalGuide.com. CardinalGuide.com. This is the Truth Network.