Wow! That’s not a very pleasant thought!
Social Security just had its 89Th birthday in August, and things aren’t looking so good.
Right now, the money on reserve for Social Security benefits will be depleted by 2035, cutting benefits by 17 percent.
Unfortunately, this scary news is not new.
Deciding When to File For Social Secirity Benefits
Through several administrations, Congress has failed to extend the life of the Social Security fund, leaving retirees and pre-retirees on very shaky ground.
This unhappy news usually comes to light when people research when they should file for social security benefits.
Early Retirement
Many people begin to draw benefits when they turn 62, which is considered early retirement.
The downside of filing before full retirement is that your life-long benefits are drastically reduced by 30%.
At this time, more and more workers are choosing this option because they are concerned that if they wait until full retirement age, the Social Security money will be gone.
According to a certified financial planner, “The worst thing that is happening here – because of Congress not acting – is you have people saying, I’m just going to grab it as soon as I can because I’m afraid it’s not going to be there.”
Full Social Security Benefits
You are entitled to full benefits this year if born between 1943 and 1954.
There is a gradual increase for those born between 1955 and 1966. If you wait, your benefits increase by 8% annually until you reach the age of 70.
Most people who start drawing their Social Security early are those who need money right now.
According to the Center For Retirement Research, however, some feel that after paying payroll taxes for years, they feel a sense of ownership about their future benefits and want to claim what belongs to them.
One of the largest groups drawing Social Security early is those who fear their benefits won’t be there when they retire or will have to accept reduced benefits.
Why Do People Claim Social Security Early?
Social Security expert Mary Beth Franklin says,
“…There are good reasons to claim your benefits early: If you need the money or are in poor health and not likely to reach average life expectancy. But it’s a shame that people are grabbing permanently reduced benefits out of fear.”
She blames Congress, which she feels “should at least be giving some sort of reassuring messages to the American public, so people aren’t grabbing these reduced benefits early.”
Some Proposed Solutions
As Social Security celebrates its 89th birthday, there is much speculation about how to keep the program strong in the future.
Here are a few of the ideas that are being tossed around:
- Make more incomes eligible for Social Security taxes. Now, people only pay taxes on earnings up to $168,600. That’s a 20% jump from five years ago!
- Gradually push back the full retirement age from 66 or 67, depending on your birth year.
- The most debated idea is “means testing,” which would reduce the benefits for people with higher incomes or more assets. But no one has agreed on where those limits should be set.
However, at this point, none of these proposals have yet to be presented to Congress.
What Should You Do? Educate Yourself!
Until action is taken, uncertainty about the future of Social Security benefits will continue, particularly for Gen X and younger generations.
Education is crucial
Visit the Social Security Administration website and review the Trustees Report to understand your benefits and the best time to apply.
It’s important to stay informed, whether through your research, consulting financial experts, or even contacting your local Social Security office to figure out what’s best for you.
Since it is part of your retirement package, we recommend you call us at Kabb Law at 216-991-5222 as well.
We’ll help you determine the best next step to receive the public retirement benefits you deserve!
