It appears that due to the recession, SS will pay more in benefits this year than it takes in for the first time. Earlier projections for this was a little later.
We have all read that this was going to happen sometime in the next 10 years or so... depending on which estimate you reviewed.
The government will likely enact some changes to cover the gap. Most likely it will mean some combination of items below:
- SS tax increase of some form.
- Higher taxes on SS beneficiaries (if they have other income Higher AGI).
- Moving the retirement age out for younger people (under 40) to shore up the program for the future.
- Some ultra liberals think qualification to get SS should be means tested (but this will not happen). Item 2 is much more likely.
If you are of moderate means and have money to ER... does this provide an extra incentive to ER and spend money early rather than late?
If you do ER, it might make sense to try to get assets characterized such that it does not factor into an AGI... but the rules will likely change to close any loopholes (except perhaps for ones home).
Any thoughts on the matter?