Though Social Security continues to provide crucial retirement benefits to millions of seniors, the program is, to some extent, in trouble. Once its trust funds run out, beneficiaries risk as much as a 21% cut in benefits beginning in 2034. That’s bad for the seniors today who count on that income to stay afloat. It also explains why most working Americans don’t think the program will be there for them once they’re ready to retire.
But despite the doom and gloom surrounding Social Security, there’s also much to celebrate. Here are three positive points about Social Security to remember the next time you start bemoaning its shortcomings.
1. The program isn’t going broke
Though a potential reduction in benefits is hardly something to celebrate, let’s not ignore the bigger picture: Social Security will, by all projections, be around for many, many years to come. The program gets the bulk of its revenue from payroll taxes, so as long as we have a workforce, Social Security will continue to collect money, and recipients will continue to collect benefits in some shape or form.
Furthermore, because of the number of people today who rely on Social Security as their primary source of income, Congress is reasonably invested in avoiding a future benefits cut. And while we don’t have a solution to the program’s impending shortfall at present, there are many in the works.
2. You have the power to boost your benefits
First, the bad news: Social Security is designed to replace only about 40% of the average worker’s pre-retirement income, assuming there are no benefits cut. Since most folks need roughly double that amount to live comfortably in retirement, the end result is that you can’t count on Social Security alone to pay your senior living expenses.
The good news: You have the ability to substantially raise your benefits, thereby securing a higher monthly income stream for life. All you need to do is hold off on claiming benefits past your full retirement age, and accrue delayed retirement credits for as long as you can (keeping in mind that these credits stop accruing at age 70).
Let’s imagine your full retirement age is 67, at which point you’re entitled to a $1,500 monthly benefit, and that you don’t file for Social Security until you turn 70. By waiting that long, you’ll end up boosting your monthly payments to $1,860, thereby giving yourself an extra $4,320 a year to work with. Best of all, that increase is permanent.
3. You might get benefits even if you never worked a day in your life
To become eligible for Social Security in retirement, you’ll need to have accumulated 40-lifetime credits, whose dollar value changes from year to year. In 2018, one credit can be gained per $1,320 of earnings. Next year, the value of a single credit will be $1,360 in earnings. It, therefore, stands to reason that if you never worked, you won’t collect benefits when you’re older.
But that’s not necessarily true. If you are, or were, married to someone who’s eligible for Social Security, you may be entitled to spousal benefits. These are based on your current or former spouse’s work record. But in a nutshell, you could end up collecting as much as half of your spouse’s benefit at full retirement age. This means that if your spouse’s work record translates into a $1,500 monthly benefit, you might get $750 yourself.
When Social Security is in the news, the details are often depressing. But rather than get caught up in that despair, realize that Social Security still has a lot going for it. Not only can it carry on without its trust funds, but it also allows you to actively grow your benefits while covering you even if you never managed to earn any money. And these are all reasons for a positive outlook about Social Security.
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