Social Security’s Six-Year Clock: How Advisors Can Help Clients Prepare for the Unknown

As has been the case during almost every Congressional iteration since 2013, a variation of the Social Security 2100 Act has been introduced as a solution to the program's impending insolvency. Named for the (approximate) year to which its proposed solutions would purportedly fund Social Security retirement benefits, the bill is sponsored by Rep. John B. Larson and Sen. Richard Blumenthal. 

Experts agree that the bill – which targets high earners with the elimination of the Social Security tax cap and new taxation on investment income for those earning over $400,000, among other changes – is "unlikely to pass". 

Still, the proposed legislation offers an example of a Social Security funding solution that would address the program's impending insolvency, which is anticipated to be years, not decades, away. 

With as little as six years to find a solution, and hundreds of millions of dollars in future retirement benefits at stake, the Social Security 2100 Act is the only current indication that the 119th Congress has any intention of taking immediate action. Its core component, removing the limit on income that can be taxed by Social Security (currently set at $184,500) is among the most commonly proposed (and considered among the most effective) potential insolvency solution. 

With so much uncertainty, how are future retirees to prepare? HealthView has consistently suggested that financial professionals and their clients consider additional retirement income sources that generate the equivalent of potential lost benefits, should Congress fail to act or reduce the client's benefits through one or more solvency fixes. Given the historical precedent of policy changes that decrease benefits (1983: Delay of Full Retirement age by two years; 2015: Elimination of popular, profitable claiming options), this approach may be particularly prudent. 

HealthView's research shows that an average-earning couple in their mid-50s would need to invest around $55,000 today to generate that projected income, and a high-earning couple of the same age would need to invest around $125,000.