'We Should Not Just Be Dependent Upon The Payroll Tax' To Fund Social Security, Says Retirement Expert Teresa Ghilarducci

More than 67 million people receive Social Security benefits each month. But this program that so many rely on has projected depletion dates looming over us if some things don't change soon. The Congressional Budget Office (CBO) projects that the two Social Security Trust Funds that pay out benefits, if combined, would be depleted by 2034. 

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The Old-Age and Survivors Insurance (OASI) Trust Fund, which provides benefits to retirees and their families, will face depletion by 2033. The Disability Insurance (DI) Trust Fund, which benefits disabled workers and their families, will be depleted in 2064. 

Some economists, politicians, and retirement experts have proposed ideas to help fix this deficit. Some suggest raising payroll taxes, while others believe that high earners should be taxed more. Others, like Larry Fink, propose encouraging Americans to work longer and delay claiming their benefits. 

Teresa Ghilarducci, a labor economist and renowned retirement expert, told Bloomberg that Fink's plan won't work because many people are physically unable to work longer as they age. 

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Ghilarducci also said there are "many easy fixes" to this problem. One of these fixes is to find other ways to raise money for the program. 

"We should not just be dependent upon the payroll tax to fund the whole thing," she said. "There are many easy fixes to Social Security … it really requires more money from other pots, [like] capital gains. There's a lot of other places [where] we can get Social Security revenue. The key thing, as an economist, is whether or not the amount of money needed will break the bank, will break the economy – and we're nowhere near that."

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However, not everyone agrees with Ghilarducci's approach. Some economists and policymakers believe that increasing taxes or expanding Social Security’s revenue sources could have unintended consequences, especially in an already strained economy. However, Ghilarducci points out in her interview with Bloomberg that no one in Washington can agree on the best way to fix this problem. 

The debate about how best to sustain Social Security is far from settled, and opinions remain deeply divided. As the conversation around Social Security reform heats up, Ghilarducci's ideas present a less drastic alternative to slashing benefits or pushing the retirement age even higher. Her focus on tapping into other revenue streams reflects a broader understanding that Social Security is more than just a payroll-funded program – it’s a vital part of the social safety net that needs to be preserved and strengthened.

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The outcome of this debate is important for those approaching retirement or currently depending on Social Security. The decisions made in the coming years will directly influence the financial security of millions of Americans. Staying informed and considering the guidance of a financial advisor could be key to navigating the potential changes ahead.

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