Will Social Security Benefits run out in 2032? Good morning everyone and welcome to Finance Friday. It’s the end of the month which means its time for our Question of the Week. I’ve actually had more than a few people ask me this question:
“I heard that Social Security will run out soon. What does that do for my retirement?”
The answer to this question is a 3-Part Answer. It involves what the problem is, who is mostly affected by it and what you can do now to prepare for the unexpected. Let’s start with what we currently know.
The Congressional Budget Office is projecting that the Social Security Trust Fund will be exhausted by 2032. This is due to the Social Security Administration paying out more benefits than payroll taxes it collects, which allows for the trust to be drawn down. Other factors that are affecting it on a smaller scope are the steady declining birth rates and Americans living longer than ever before.
Now, lets squash the rumor right now, Social Security is not vanishing. However, after 2032, people should prepare to receive a lower monthly benefit, about 75%-80%, going forward.
Those mostly affected will be retirees with little savings and near-retirees that are depending on Social Security Income as their main Income source and retirement source.
So, what steps can you take today? The most important one would be to speak with your Financial Planner/Advisor. Discuss your options of when the best time would be to begin claiming your benefits and what other income and retirement sources are available to you to mitigate the lower benefit. Remember, the Social Security Administration sends out an annual reminder email to check your Benefits Statement. Make sure you’re doing that regularly and with your advisor.
This is multi-phased conversation. What I covered today is just the tip of the iceberg and it goes beyond what we discussed here. Please contact me if you have further questions and thoughts on this discussion to hector@hrcfin.com. Also, don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday Tips and Insights. Thank you again for your time this morning and have a fantastic weekend!