80 percent of scheduled benefi ….

80 percent of scheduled benefi ts. Again, this is when we are combining the two funds. If we separate the funds, the OASI fund payments would be paid at 77 percent, while disability payments would continue to be paid in full.

The big takeaway from the report to me is that, the hypothetical assumptions show that we still have 11 years until 2034, when the report states that Social Security will have depleted its reserves and benefits would have to be reduced. At that point, the program would still be able to pay 80 percent of its scheduled benefits. Although getting 77-80 percent of your benefits is not ideal, it is certainly not the same as Social Security benefits not being paid at all.

The good news is that, although projections show benefi ts would need to be reduced in 2034, that assumes no action being taken by lawmakers between now and then. As you saw with the Amendments of 1977, lawmakers can take action to strengthen the Social Security funds. In fact, in the trustees report this year, the trustees encouraged lawmakers to take action sooner rather than later. The sooner that lawmakers take corrective action, the sooner beneficiaries and workers can adjust to these changes.

There are many proposed options that lawmakers have to consider.

One option would be how to compute the cost of living adjustment each year (COLA adjustment). We have seen very high inflation the past couple of years, which has increased the COLA adjustment that Social Security recipients receive. The Social Security website lists a number of different options on what changes to the COLA would affect the program going forward.

Another option would be changing the full retirement age. This has been done in the past to help strengthen the social security program. No one likes to the option of raising the full retirement age, but it is an option for lawmakers.

A third option would be to invest a portion of the Social Security trust funds in marketable securities (examples would be equities or corporate bonds) rather than in specialissue government bonds. The goal for doing something like this would be for the program to have better returns on their investment. With that, of course, comes more risk.

There are many proposals that include many different options for lawmakers to think about.

Lawmakers could raise taxes to increase cash coming into the program, cut benefits to slow cash leaving, raise retirement age or some combination of all of these. Unfortunately the longer Congress waits, the more likely a more drastic change will have to be made.

From a revenue perspective, Congress could increase the rate of the FICA tax. The FICA tax is the payroll tax that funds both Social Security and Medicare. Currently, the FICA tax is set at 12.4 percent, which is split equally between employers and employees (at 6.2 percent for each).

Another potential change that Congress could enact is that lawmakers could subject more income to the tax. Currently, the current maximum is $160,200. Anything that someone makes over that amount, is not subject to social security taxes.

At the end of the day, the Social Security program is not in as dire of straights as some would make you believe. With that being said, eventually there will need to be changes made for the program to continue to pay full benefits. Those changes could come from one of the proposed changes discussed earlier or a combination of these proposed changes. New proposals may be brought to the table as well. The sooner these changes are made, the more time recipients and workers will have to adjust to the new changes that may be implemented.