As the federal budget continues to be a concern for every American taxpayer, I have noticed recently that there seems to be a lot of confusion regarding the effect of Social Security on the budget process. We know that Social Security and Medicare were set up to be self-funded from payroll taxes, but some of the recent budget debate has centered around the payment of Social Security benefits.
For example, is the Social Security system currently running a deficit or a surplus? I have seen articles claiming that each is true. I have also read accounts of how paying benefits will increase the deficit, and even that redeeming bonds from the trust fund will increase the total national debt. In this week's E-Letter, I'm going to try to answer some of these questions as well as clue you in on how to read references to these budgetary items.
On the subject of Social Security and retirement in general, I'm also going to discuss AARP's apparent reversal of its long-held stand against cutting Social Security benefits, and why AARP is now in full damage control mode. Finally, I'll bring you up to speed regarding new proposals to tax and/or confiscate your retirement account assets. In an effort to plug the deficit holes, Congress seems to be willing to make a bad situation even worse.