‘There’s Plenty of Room to Raise Taxes’: This Billionaire Says US Will Have to Change Social Security, Cut Federal Health Insurance to Deal With Worsening Debt Crisis – Are You Ready?

‘There’s Plenty of Room to Raise Taxes’: This Billionaire Says US Will Need to Change Social Security, Cut Federal Health Insurance to Deal With Worsening Debt Crisis, Are You Ready?

Hedge fund boss Paul Tudor Jones is warning Americans about the big fiscal problem ahead.

Appearing on CNBC’s Squawk Box this week, the founder and CIO of Tudor Investments said there are obvious solutions to the country’s $33 trillion debt crisis, but not everyone will like them.

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According to Tudor Jones, many politicians in the US typically only look at one side of the equation: how to cut spending. He believes lawmakers are unwilling to consider another solution to the country’s massive fiscal problem to unequivocally raise taxes.

The country’s tax-to-GDP ratio at the end of 2022 was 18.7%, according to the latest CEIC Data report, which is significantly lower than that of the European Union (26.8%) and the United Kingdom (27%) .

There is plenty of room for us to raise taxes, Tudor Jones said during the interview.

But the necessary support for any such notion is typically difficult to find in Congress. And that may be especially true given that the House is currently in limbo as lawmakers try to install a new president and continue to clash over the current budget, narrowly avoiding a government shutdown in early October.

If Tudor Jones is on the right track and program cuts and tax increases are lurking on the horizon, here are some ways to protect your finances and minimize the financial impact of any policy changes.

Discover your Social Security benefits

We will have to sacrifice, Tudor Jones told CNBC. We will have to cut expenses. We will have to deal with rights. We will have to change Social Security. We will have to limit Medicare and Medicaid.

In 2023, nearly 67 million Americans will receive a monthly Social Security benefit, totaling about $1.4 billion in benefits paid during the year, according to the Social Security Administration (SSA).

Nearly 90% of Americans ages 65 and older were receiving Social Security benefits as of June 30, according to SSA data, with federal payments accounting for about 30% of their income.

But, as Tudor Jones and some politicians (mostly Republicans) have pointed out, it is a very expensive program to maintain, especially considering that the life expectancy of 65-year-olds is currently more than 20 years. Furthermore, these costs could increase as the number of Americans in this age group is predicted to grow from about 58 million in 2022 to about 75 million in 2035.

With that in mind, it can be confusing to find the ideal time to start claiming Social Security. The earliest Americans can start claiming benefits is at age 62, but if you delay claiming you will receive higher monthly payments, with maximum benefits available to those claiming at age 70 and older.

While some Americans may think they won’t live long enough to make the most of the benefits they’ve earned, some also worry that Social Security will run out of money, as suggested by Tudor Jones.

Just remember, as things currently stand, waiting to claim Social Security will net you a larger monthly payment, which will come in handy if you’re one of the estimated 15% of Americans who rely solely on this benefit for at least 90% of your income. during retirement.

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Be careful with healthcare expenses

Four federal health insurance programs, Medicare, Medicaid, Childrens Health Insurance Program (CHIP), and Affordable Care Act (ACA), market health insurance subsidies represent 24% of the federal budget in 2023, or $1.5 trillion, according to the Center on Budget and Policy Priorities.

Half of that huge total, or $828 billion, goes to Medicare, which provides health coverage to about 66 million people aged 65 and over or with disabilities. Once again, there have been repeated calls from certain politicians to cut Medicare funding, but President Biden has responded with legislation that expands and strengthens the program.

While politicians debate the cost of health care, there are things you can do to protect your financial security.

An emergency fund can help retirees weather financial storms, such as prolonged hospital stays or illnesses where insurance or Medicare don’t cover the full cost.

Finally, if you’re insured under a high-deductible plan, consider opening a health savings account (HSA) to help you cover out-of-pocket medical, dental, and vision expenses. With an HSA, you must deposit pre-tax money from your paycheck, which you can then withdraw tax-free for eligible expenses.

Invest your money wisely

Last but not least, with federal funding for social programs under scrutiny, it is extremely important to save and invest your money wisely during your working life so that your finances are ready for retirement.

Tax-advantaged investment accounts like a 401(k) or individual retirement account (IRA) are great tools to help you get ahead. A 401(k), for example, allows you to direct a portion of your paycheck into an account where you can invest and grow your money and get tax breaks. If you’re still working, take advantage of any available matching contributions from your employer, which is as close to free money as you can get.

You don’t need to be an investing genius to build a solid nest egg for retirement. You can start small by investing your spare change, or you can put your money to work over time through various investment apps or crowdfunding platforms.

Remember, diversifying your investment portfolio (and ultimately your retirement income) with traditional stocks and bonds or alternative assets like real estate will also help set you up for retirement success, regardless of any future entitlement reforms or cuts to social programs.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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