Social Security Reforms Could Be on the Way—Here’s What Real Estate Investors Need to Know
Summary
This article discusses potential Social Security reforms that could lead to lower benefits and higher taxes in the future. Hosts should prepare for these changes by focusing on aggressive investing, planning for longer working lives, and exploring cost-of-living adjustments such as living abroad or relocating to a more affordable area.
Key Insights
- •The Social Security Administration revised its insolvency forecast to 2032. Proposed solutions involve cutting benefits, slower COLA increases, raising the full retirement age, means-testing recipients, raising FICA taxes, and removing the cap on FICA taxes.
- •The current debt-to-GDP ratio in the U.S. is a worrying 119%.
- •The cost of living in Lima is 65% lower than in Los Angeles.
Action Items
- ✓Plan to cover your own living expenses in retirement, with returns from your own investments.Effort: mediumImpact: high
- ✓Up your game as an investor and consider a more aggressive investing portfolio.Effort: mediumImpact: high
- ✓Explore cost-of-living contingency plans, such as moving to a more affordable location domestically or abroad.Effort: mediumImpact: high
Tools & Resources
- →Vanguard Total Stock Market Index Fund (VTI): Use a roboadvisor or buy shares in the Vanguard Total Stock Market Index Fund (VTI) and the Vanguard FTSE All World Excluding US Fund (VEU).
- →Vanguard FTSE All World Excluding US Fund (VEU): Use a roboadvisor or buy shares in the Vanguard FTSE All World Excluding US Fund (VEU).
Watch Out For
- ⚠Don’t count on Social Security; future benefits may be lower than expected.
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