Social Security: What Experts are Advising Amidst Uncertainty

Social Security: What Experts Are Advising Amidst Uncertainty

The Latest on Social Security The latest Social Security Trustees report predicts that the combined retirement and disability trust fund reserves will go broke in 2035, causing concern among Americans, particularly those nearing retirement. However, it's important to note that the potential depletion of the fund does not mean an empty till. Benefits will still be paid, though at a reduced rate of 83% of what was promised. Solutions to the Shortfall Several solutions exist to address the shortfall, including:

Raising payroll taxes (currently 12.4%)

Increasing the retirement age for younger workers

Lifting the cap on income subject to Social Security tax ($168,600 in 2024)

Advice from Experts Experts advise planning for a reduction in Social Security benefits and taking steps to supplement retirement income. Here are their recommendations: 1. Assume a Reduced Benefit:

Many planners already incorporate potential Social Security reductions into client plans. They encourage clients to save more in their 401(k), IRA, or brokerage accounts and consider delaying Social Security benefits until age 70 for a higher payment.

2. Save, Invest, and Don't Claim Early:

Taking ownership of retirement savings and investing wisely is crucial. Experts recommend starting saving as early as possible to build a nest egg. Avoid claiming Social Security benefits early, as this will result in a significantly reduced monthly check.

3. Delay Social Security - Only If You Can: Waiting until age 70 to claim Social Security is ideal for those in good health with other income sources. However, many Americans may not have the luxury of delaying, particularly those in highly physical jobs who face physical decline. Congress has less than a decade to address the shortfall facing millions of Americans, and it's crucial that they take swift action.