Michael Finke, The American College of Financial Services Professor and Frank M. Engle Chair of Economic Security, and finStream.tv Co-Founder Robert Powell sit down with Yahoo Finance Live to debate certain misconceptions or uncertainties surrounding the U.S. Social Security program.
Video Transcript
SEANA SMITH: All right, well, Michael and Bob, we want to do something a little bit different here. We're going to play a game. And it's called Myth or Matter of Fact. And we bring this up because there's a lot out there that's misunderstood when it comes to Social Security. So we're going to give you guys a statement on Social Security. You have 20 seconds to reveal whether or not it's a myth or if it's a fact and why.
So Bob, we're going to start with you. Then Michael, we'll ask you another question here. But Bob, myth or fact, Social Security will go broke soon?
ROBERT POWELL: Well, Michael just sort of hinted it at a second ago. The trust fund will have a deficit come 2034. And beneficiaries, at that point, will receive 77% of their scheduled benefits. So it's a myth that it's going broke, but it's a fact that there will be a shortfall.
DAVE BRIGGS: OK, Michael, myth or fact, Social Security benefits keep up with inflation?
MICHAEL FINKE: Well, that is a little bit of both. So they do keep up with inflation in the sense that there is an inflation adjustment to Social Security, but it's been argued that inflation adjustment is maybe a little bit too generous. Because Social Security recipients can be a little bit more flexible about their spending compared to workers.
If the price of gas goes up, then workers have to pay it to get to work. But retirees can be a little bit more flexible and go on fewer driving vacations. So yes, it does keep up with inflation but maybe even a little bit more. And I think this may be one of those areas where we might see a potential cut.
SEANA SMITH: All right, we've got to keep the ball rolling here, Bob. Myth or fact, full Social Security benefits start at the age of 65?
ROBERT POWELL: Well, you gave this away earlier in the program. It does not begin at 65. Medicare begins at 65. But for Social Security, those born between '43 and '54 at 66, between '55 and '69 at 66 and some months, and then for those born in 1960 and after, it's age 67.
DAVE BRIGGS: And finally, Michael, myth or fact, you can work and get benefits at the same time?
MICHAEL FINKE: Well, you can, but your benefits are reduced if you work-- if you take Social Security before full retirement age. So know when your full retirement age is. For me, it's 67. Anybody born after 1960, we reach full retirement age at 67. And if we continue to work and earn money above a threshold-- and that threshold is about $22,000-- then we are taxed. We have our Social Security benefits reduced by $1 for every $2 we earn.
DAVE BRIGGS: Touche, nice job, Bob and Michael. We appreciate you both. Job well done, both good sports as well.
