- Changes could be made to amend the Social Security trust fund, which is projected to be unable to pay full benefits only until the 2030s.
- The uncertainty may make many people want to claim early retirement, but experts say it’s usually a mistake.
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Negative headlines about the future of Social Security may be influencing how people are preparing for their retirement.
Nearly three-quarters, or 74%, of people say they can’t count on Social Security benefits for the money they’ll make in retirement, according to a new survey by . Allianz Life Insurance Company of North America.
The company has included social security questions in its quarterly market perception survey for the first time in response to increased interest in the program in the news. The survey, conducted in March, included more than 1,000 respondents.
In late March, the Social Security Administration’s trustees issued a new annual report with more pressing projections for the program’s two trust funds. One of which he pays for retirement and the other for disability benefits. In 2034, the program may only be able to pay out 80% of the combined fund’s profits.
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In particular, the bankruptcy maturity of the fund used to pay retirement benefits is even earlier, 2033, or 10 years away. At that time, the Trustees estimate that 77% of these benefits will be paid.
AARP CEO Jo Ann Jenkins said: wrote in the editorial Thursday.
Most leaders and experts agree that action needs to be taken, but uncertainty remains as to exactly what changes will occur.
For many, it adds uncertainty to retirement plans. Concern about whether they can count on Social Security when they retire was highest among Gen Xers, at 84%. Millennials follow him at 80%. According to Allianz survey, he is 63% of baby boomers.
The survey also found that most respondents (88%) said that having a guaranteed retirement income, in addition to social security, was important to their well-being. rice field.
But not everyone is lucky enough to have other resources to rely on. Social Security is the largest source of income for most people over retirement age, Jenkins pointed outOn the other hand, it is the only source of income for 14% of these people.
“Unfortunately, it’s one of the reasons people make the mistake of claiming their benefits too quickly,” Kelly Lavigne, vice president of consumer insights at Allianz Life, said of the program’s outlook.
They think, “‘Let’s get it before it breaks,’ but in reality it doesn’t help at all,” he said.
To see how a 23% benefit cut (based on Social Security’s latest projections for retirement funds) will affect you, turn to our Benefits Maximizing Calculator or other online tools. is best, experts say.
Larry Kotlikoff, an economics professor at Boston University and creator of the billing software tool Maximize My Social Security, has worked out the numbers and said, “Waiting still has great benefits.”
Kotlikov said, “Even if we receive benefits early, there will still be benefits cuts.
“So the benefits of taking them early are smaller than expected,” he said.
People make the mistake of claiming their interests too quickly… “I’m going to get mine before it breaks.” In fact, it doesn’t help at all.
Vice President of Consumer Insights, Allianz Life
Changes enacted in 1983 To strengthen social security. One of the major reforms, the full retirement age increase, where the beneficiary will receive her 100% of the retirement benefits earned, is still being phased in today. Those born after 1960 Retirement age is 67not 66 as in the old cohort.
Kotlikov said parliamentarians could again follow the same strategy and raise the full retirement age to 70. In fact, some leaders in Washington are already debating the idea.
Under current rules, applicants can receive a significant boost of up to 8% per year. Wait until age 70 beyond full retirement age Start the perks.
It makes sense to wait, especially for those who are single, have no spouse or children, and are eligible for benefits based on their records, Kotlikov said.
However, in situations where life expectancy is short, children with disabilities may not be able to collect until they do, or a spouse may be able to collect child support, the software usually recommends starting at an earlier age. . .
If the retirement age is raised, it will cut benefits. But such changes are unlikely to affect current or near-term retirees, say Kotlikoff and Lavigne.
There are other reasons why people may want to claim their retirement benefits early. The 8.7% Cost of Living Adjustment (COLA), implemented this year to compensate for high inflation. This is the first increase in about 40 years.
“If you are 62 or older, whether you are claiming or waiting for benefits, [COLA] It’s been increased to your social security amount,” Lavigne said.
In other words, he said, both sides could benefit, whether they received more money in the future or received more money now.
Instead of focusing on the COLA, it’s important that future beneficiaries focus on getting their plans together. Then you’ll know how to minimize your taxes and what to do if inflation spikes again after you retire.
“If you don’t have a plan in place, how do you know what to do when the unexpected happens?” Lavigne said.