How Big Is the Social Security Crisis?

Could you handle a 25% cut in your Social Security income in 19 years? Here's what you can do to help yourself.

Aug 23, 2014 at 9:00AM

If you want to be the life of your next cocktail party, just tell everyone you meet that in 19 short years, all scheduled Social Security benefits are expected to be slashed by about 23%. Yep, 2033 will be a heck of a year!

Oh, sure, you might say. Congress could actually do its job and work diligently in a bipartisan effort to fix things. But what are the odds of that?

What's the problem?
Confidence in Congress is at historic lows, and deservedly so. However, I have to think public pressure will become so intense that lawmakers will be forced to find a way to resolve the Social Security crisis.

That's the good news. The bad news is that any solution will cause all of us some pain somewhere along the line. Here's the short summary of the government-appointed Board of Trustees' 250-page report just released a few weeks ago:

  • With no congressional action, Social Security and Medicare trust fund reserves will run out in 2033.
  • At that time, there will only be enough funding coming in to pay 77% of scheduled benefits.

What's the fix?
According to the report, here's what it would take to fix the problem and keep the combined trust funds solvent for at least the next 75 years:

  • Have everyone pay 22.8% more in payroll taxes by increasing the rate from 12.4% to 15.23%;
  • Reduce benefits to all current and future beneficiaries by 17.4% (or 20.8% if reducing only the benefits of those first becoming eligible in 2014 or later); or
  • Some combination of the above

I had the pleasure of interviewing Jean Setzfand, the vice president of financial security at AARP, about all of these issues. In the video below, she explains that perhaps the Social Security crisis will jolt people into taking some action to help themselves. Let this serve as a catalyst for you to either begin saving or start saving more.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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