Will Social Security Benefits Be Cut? Should I Be Worried?

In this episode of Friends Talk Financial Planning, we are joined by Denny Heywood, a former Social Security Administration (SSA) employee and consultant, to address public concerns about possible cuts to Social Security. Despite alarming media headlines, there are no current plans to cut Social Security benefits. However, without Congressional action to sustain trust funds, reduced payouts could occur around 2032.

Denny explains that potential future fixes may include:

1) Raising the taxable income cap (currently around $176,000) to $500,000 or more.

2) Increasing the earliest eligibility age for benefits (currently 62).

3) Adjusting administrative staffing and consolidating smaller SSA offices — not eliminating services.

Current beneficiaries are not at risk, and historically, changes have targeted future recipients to avoid public backlash. There is no need to panic, just stay informed. Denny also shares with us some practical tips for contacting SSA effectively, such as avoiding Mondays and calling between 11 a.m. and 4 p.m. during the workweek.

In summary, don't worry, your benefits should be safe. Stay informed and talk to a consultant if you have questions or concerns!

Resources:

-Contact Information for Dennis Heywood, Social Security Solutions LLC: https://ss-help.com/ | (513) 235-8036

- Alliance of Comprehensive Planners: https://www.acplanners.org 

- John's firm website: https://www.trinfin.com 

-Find us on Facebook: www.facebook.com/friendstalkfinancialplanning 

#ACPMemberWisdom #socialsecurity #financialplanning 

TRANSCRIPT:

Bridget: Social Security is being cut. Does that make you afraid? Today we're going to be talking about exactly what it means on Friends Talk Financial Planning. Hi, I'm Bridget Sullivan Mermel. I've got a fee-only financial planning practice in Chicago, Illinois.

John: And I'm John Scherer. I've got a fee-only financial planning practice in Middleton, Wisconsin. Joining us today is special guest Denny Heywood. Denny runs Social Security Solutions. He's a great resource for both Bridget and I and our practices, and we're excited to hear him talk about his decades of experience working with Social Security and working directly with people to help them understand these issues. Denny, thanks so much for being here today.

Denny: You're welcome, John. Good to be here.

John: Great. Before we jump into this, Denny, maybe just give a little bit of background on your history with Social Security, working both for the government and as a consultant. And just let people know why you know so much about this area of the world.

Denny: Thanks, John. Well, I spent my career with Social Security for 30 years and retired and started consulting, with financial planners, estate plan attorneys, anybody who really would need my services or want my services. And I did that from about 2007 to the present.

I sit down with individuals and go over mainly their Social Security retirement benefits, who's eligible for what and when, and kind of patch it into their lives. But currently, I'm very busy. I get a lot of referrals. Thank you 😊 It's a pleasure. I do help with disability within individuals and other various subjects to do with Social Security. But it's mainly retirement, survivor and disability that I consult.

Bridget: Great. So, Denny, the news says that Social Security is being cut. And I was worried about it too until I dug a little deeper. So why don't you talk about when it says Social Security is being cut, when that's what's on the news, what's the reality behind that?

Denny: Currently, the reality is that Congress has to do something to preserve the trust funds. There's nothing in Congress, no bill or anything, that's going to cut Social Security. The president can't cut Social Security, and he wouldn't do it anyway. You have full scale riots out there. But if they don't do something to preserve the trust funds, in the future, by like 2032, there could be a problem. There's not enough money in there to pay people.

But I think they will do something. They can do several things to preserve the trust funds. Raise the tax base. A bunch of people are living longer. You can't take Your benefit at 62. Take it at 65. That's the earliest you can take it. They will take care of the problem. And there's nothing currently going on to take any benefits away from anybody, anywhere.

Bridget: So there's a difference between cuts to Social Security and cuts to Social Security benefits. That's the distinction that I don't think that people are getting when they read about it in the news. There're no plans to cut benefits. And the most recent thing they did was increase benefits, which we have a whole other video about for a certain group of people who were getting less benefits before. There're no plans to cut benefits. Is that correct?

Denny: That's right. There's no plan to cut it. Well, actually, there's a non-plan if they don't do something to preserve the trust funds. But there's nothing out there right now.

Bridget: Long term there needs to be changes.

Denny: Right. Long term, I think they will take care of the trust funds.

Bridget: When they talk about cuts, it sounds like they're talking about cuts to the administrative side of Social Security. What do you know about that?

Denny: Well, I know what I've heard, and you can read it on the website. But they are going to close some offices. Some offices are functionally “not profitable.” They’ll put eight people working in a small building with a bigger office somewhere else. There're no plans to shut down Social Security. In fact, they're doing a pretty good job at trying to get more people into the servicing end of it, taking claims, answering phones.

From what I've understood, the new commissioner that's coming on and Ludek, who's there right now, have done an incredible job. They did let about 7,000 people go, but most of these people were higher echelon people that were in a service capacity that might not have been so necessary. But at the local level, Social Security has always been understaffed. You have to understand that. That's why you got long waiting lines when you go in. Automation did that. But there's no plan to cut anybody right now to shut down any major offices for Social Security to go out of business.

John: When you talk, Denny about the local offices and getting in, I think that's one of the things that's concerning folks. As you said, it's been hard for years. How do you get help when you need it? Do you have any tips for folks? On the previous episode that Bridget mentioned, you were talking about, hey, if you work for a government and have a pension, you need to talk to Social Security. What does a person need to do to get an appointment that's not 18 months from now?

Denny: Well, that's a good question. But what I tell people is this. There are multiple teleservice centers throughout the country. And if you have to call Social Security, you would call one of those and then somebody would answer your question. And people get put on hold and get dropped. So let's be smart about this. They're East Coast to West Coast.

If I wanted to call Social Security, I'd want to call when all the offices are open. They take phone calls from 7am to 7pm, but if you call at 7am you've only got the East Coast open. So what I would do is I would call between 11am and 4pm. Now every teleservice center is open. I would not call on a Monday, and don't call on a day after a holiday. That's the busiest time.

John: Yeah.

Denny: And to make an appointment, John, to answer your question. Call. They may not have an appointment available, and they’ll say, “We'll call you back.” And usually they do call you back. But I would just call throughout the week, because you can bump into a cancellation. Bingo. And you're in. That's how I'd handle it.

John: That's great.

Bridget: So long term, we know that at some point in the next decade, Social Security is going to run out of money. And gee whiz, that's right around when I'm going to be taking it. What do you think they're going to do?

Denny: They're going to raise the tax base a bunch.

Bridget: Okay, and so what does that mean?

Denny: Well, right now the maximum Social Security taxable each year from someone working a job or self-employment is $176,100. That's the maximum. I would say that they're going to kick that up to 500,000 to a million dollars.

Bridget: So tax the rich. That's always popular. 😊

Denny: Right.

Bridget: I mean they might keep out some people, but then people who are over $500,000…

Denny: Right. Well, it's like Medicare. Everything's taxable on Medicare right now.

Bridget: Okay, right.

Denny: They could do that, too. That would preserve the trust funds. But they will do something. And as long as Congress has the power to tax, and they do, Social Security will be here, I feel.

Bridget: Well, another thing you mentioned before the episode was that they could say, okay, if you're born after 1980 or 1985, then the first year you can get benefits is not 62 but some other age.

Denny: Maybe 65.

Bridget: Okay.

Denny: I mean, people are living longer. People are healthier longer. And I think that's one of the things they could do. They could eliminate some provisions like the 8% through age 70. They could eliminate that. That's a possibility. But to guess what they're going to do, I would say two things: raise the retirement age and raise that tax base a bunch to bring in more.

Bridget: It seems like the last time they did it, I think it was during the Reagan era. So the last time they did major changes was a long time ago, and that's exactly what they did. And it's like they try to figure out who is not going to complain. All right, people who aren’t really thinking about retirement would not complain.

And then with the income part, who do they have the least amount of sympathy for?  The people who earn over $175,000 a year. So they can play around with those things. And last time, I felt like there was a lot of drama and the solutions were pretty much the easiest solutions to go down. Does that make sense? So cutting benefits for people who are currently getting them would cause rioting.

Denny: Exactly.

Bridget: And everyone would be sympathetic to the people rioting. Everybody's sympathetic towards older people.

Denny: Seniors will come after them😊

Bridget: Yeah. One of the things that I've read is that for around 25% of the people who have Social Security, that's their main source of income when they're retired, and it might even be more than 25%. So it would gut the economy, because they all use that money and spend it. That’s not going to happen.

Denny: Yeah, they've never done anything really to affect current beneficiaries. In 2015, there were some amendments that eliminated some things you could do, file and restrict. But they've never done anything to affect a current beneficiary, like reduce the check.

Bridget: Except for now giving people more.

Denny: Right.

Bridget: So it's really been increasing, not reducing as far as benefits go.

Denny: A lot of what's going on right now, be honest with you, is some fear mongering by the media and that is not putting people in a good place. And I just tell people, rest assured, you're not going to get cut. They’re making changes for later, for as people age, for what you can and can't do. But they're not going to take money away from current beneficiaries.

Bridget: Right.

John: And that's the thing I think people are scared about. They hear this news, you see the headline, and then what do you do? And I really appreciate you sharing with our audience. You literally have decades of experience. You've been in this; you're in the trenches on a daily basis. It's not just somebody saying, “Hey, don't worry about.” No, you have real experience. We’re really grateful for your input here today.

And I'll just remind viewers to check the show notes for more information about Social Security Solutions. You can reach out to Denny. He's been invaluable in helping my clients, and I know Bridget's as well, to make good decisions and dig through some of that nonsense and get to the real things with Social Security. And with that, it's a great place to wrap things up. Here again, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: Bridget Sullivan Mermel. I've got a fee-only financial planning practice in Chicago, Illinois. John and I are both proud members of the Alliance of Comprehensive Planners. We're both taking clients, but if you're looking for an advisor in your area, check out acplanners.org. And we want to thank Denny again for being our guest today. It's wonderful to have you and don't forget to subscribe.

Denny: Thank you.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.