The future of retirement is at risk, because Social Security is headed for partial insolvency.
As this inevitability draws closer, policymakers are scrambling to find a solution. Many ideas have been proposed, but most of them fall short of truly securing the Social Security Trust Fund.
One potential measure has been put forth multiple times in recent years. It’s gaining attention once again – but is it what it seems to be? Will this idea stop Social Security from going under? Or is it just rearranging deck chairs on the sinking ship of retirees’ futures?
How Would Limiting Tax Perks Impact the Future of Retirement?
Many people plan on supplementing their Social Security income with funds from retirement plans. These plans are common benefits that workers enjoy, complete with tax incentives. But the latter part could change.
Some economists claim that these tax perks on retirement plans, which help workers avoid or defer tax costs, “don’t meaningfully change behavior.” Those who make these claims say since these tax incentives limit federal revenue, they’re actually a hindrance to Social Security’s future.
This shows how strapped Social Security is, and how severe the situation is. Just to meet payment obligations in the next decade, the program needs to draw revenue from other sources. But is it really fair to take away the tax savings workers, including seniors, earn from their hard work?
Some proponents of the plan claim it would only impact high-income individuals. But we all know how policies can grow more stringent over time, meaning everyone’s retirement savings could be at risk if this measure passes.
Would this really shore up more funds for Social Security? Maybe. But is it worth it if it dries up more of people’s private retirement savings? Is this just a matter of pulling money from your left pocket to put in your right one, and trying to pass it off as a solution?
Share your thoughts.
