Your Financial Future: Be strategic about starting Social Security benefits
According to the 2023, 1Q Quarterly Market Perceptions Study, 74% of people say they cannot count on Social Security benefits when it comes to the money they will have in retirement. In March, the Social Security Administration issued a report saying that the trust fund that pays out retirement benefits will only be able to pay 80% of benefits by 2033, a year earlier than previously projected. That蘑菇视频 just a decade away. This obviously adds to the concern.
Well, then maybe you should claim your Social Security benefits as soon as you qualify. You need to get yours before it蘑菇视频 too late, right? That won鈥檛 help much because the benefit cut would affect you whether you started now or waited. You wouldn鈥檛 be grandfathered in.
Social Security has been a political football in Washington for too long. The situation we are in is not new. It existed in 1983 when Ronald Regan was president and Tip O鈥橬eal was speaker of the House. Social Security was going to run out of money in a few years. They arrived at a compromise, which, among other things, raised the full retirement age to 67 for anyone born after 1960 and made up to 50% of benefits taxable for some recipients. Before this time, benefits were not taxed because the argument was this was a tax on a tax.
Congress will reach some kind of an agreement just like it recently did on increasing the debt limit. None of those in either party can get reelected if benefits are cut. Social Security was always a program where current workers funded retired workers. That worked fine before 10,000 Baby Boomers started turning 65 every day and people continued to live longer due to better medical care and an improved environment. This put tremendous stress on the system.
Social Security should be viewed as the important retirement asset that it is. You get a yearly cost of living increase to help keep up with inflation. A spouse can collect benefits from their partner蘑菇视频 work record even if they did not work outside of the house on their own. Upon the first death, one Social Security benefit will cease, but it will be the lower monthly amount.
You need to have a strategy about the best time to begin receiving benefits because there could be hundreds of thousand of dollars at stake. Many people claim when they are first eligible at age 62, but that could prove to be a costly mistake for decades to come. Remember, every year you wait to claim your Social Security, your benefit goes up by about 8% a year. So, it pays to wait, if you can. However, there are situations 鈥� a lower life expectancy, disabled children who cannot collect until you collect, a spouse who might also be able to collect benefits for taking care of them 鈥� where it makes sense to claim your benefit as early as you can.
People with large account values in qualified savings such as 401k, IRA and TSP may want to delay starting Social Security benefits to help lower their tax bill and maximize overall cash flow. While Social Security Administration employees can answer basic questions, they cannot give advice on how to integrate this income in your whole financial life. Work with an expert to have the best outcome for your family.
Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, 鈥淵our Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.鈥�
If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.