As in Canada, the U.S. Social Security system is funded by payroll taxes and individual contributions.
In the last couple of years, some ominous articles in various media have talked about the depletion of Social Security funds for Americans before 2033. If no steps are taken by Congress, Baby Boomers collecting Social Security could lose their pension income within their lifetimes.
During the recent election campaign, the opposition parties (as I interpret it) said they would repeal the recent age eligibility changes implemented by the (Federal) government and would enhance CPP benefits.
By 2020, it is projected that the U.S. Social Security payouts will exceed its income. About the same is projected for Canada as a result of our demographics.
Once expenses start exceeding income, the value of our CPP will likely drop. In my view, to raise CPP benefits across the board would be a long-term catastrophe for us (and our children).
Perhaps a more manageable solution is to change the CPP benefit calculation formula – giving more pension income to lower-income people.
The longer we live, the more we’ll be depending on pension income. So it had better be there.
This ad originally appeared in the Richmond News on October 16, 2015.