A Budgetary Shortfall Of $125 Trillion Through 2091
Of course, lawmakers have a lot more to worry about than just replacing interest income earned from Social Security’s asset reserves. The Trustees report estimates that between 2034 and 2091 there will be a $12.5 trillion cash shortfall if payouts to beneficiaries are kept at their current levels . That’s about two-thirds of a full-year of U.S. GDP that Congress must find a way to replace, otherwise those aforementioned benefit cuts of up to 23% may be necessary to keep the program solvent through 2091.
Social Security Isnt A Decision You Can Afford To Get Wrong
How would you like up to an additional $16,728 in retirement income every year?
Nearly seventeen thousand bucks can buy a lot of stuff. Vacations nice dinners and peace of mind.
Better yet, thats cash guaranteed by the government through Social Security. This type of bonus can be life-changing and is available to millions of Americans but sadly, many dont even know theyre entitled to it.
Are you one of these Americans?
The best way to find out is to access our report Money for a Lifetime: 7 Simple Steps to Getting the Most From Social Security.
And guess what? Even if you arent among the lucky few to get this particular bonus, we have plenty of other tips, tricks, and strategies that can help you retire more comfortably. For example
- Theres a weird loophole you can use to start receiving some benefits early at age 62… and still get up to 99% of your full benefits after you reach retirement age!
- Social Security cant be taxed, right? We reveal smart strategies to slash your tax bill.
- Waiting until 70 to file for Social Security benefits could be a mistake. Find out why.
and lots more.
Social Security isnt a decision you can afford to get wrong. Dont delay — get your report now.
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$16,728 per year in extra Social Security benefits
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Reasons Not To File For Benefits At Full Retirement Age
On the other hand, there are some scenarios in which it doesn’t pay to claim Social Security at 66, 67, or somewhere in between. One such example is if your health is poor and you don’t expect to live a very long life. That’s because Social Security is designed to provide roughly the same lifetime payout regardless of when you first file, assuming you live an average life expectancy. The logic is that if you file early and reduce your payments, you’ll compensate by collecting a larger number of payments in your lifetime. And on the flip side, if you wait until your FRA and receive fewer payments, you’ll compensate by collecting more money each month.
Generally speaking, however, it pays to claim benefits as early as possible when your life expectancy doesn’t look great. Usually, you’ll come out ahead financially by getting at that money well before your FRA.
Ultimately, the decision to file for benefits at any age boils down to your needs and personal circumstances. That’s why it pays to read up on Social Security before retirement draws near. The more you know about how the program works, the better equipped you’ll be to make the most of it.
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Hint: It’s Probably More Than You Think
Social Security provides critical benefits to millions of retired seniors. But relying too much on those benefits could spell trouble once your career comes to a close.
Unfortunately, it seems like a large chunk of women are doing just that. An estimated 62% of female workers expect Social Security to be their primary source of income in retirement, according to new data from Nationwide. Worse yet, 18% of women are looking to Social Security to provide more than 90% of their senior income. That’s just downright unrealistic.
Current And Future Retirees Could Be In For A Rude Awakening
Put plainly, Social Security is the most important social program for seniors in this country.
Without the guaranteed monthly income Social Security provides, poverty levels among seniors would spike from 8.8% to more than 40%, according to a study by the Center on Budget and Policy Priorities . That’s how important Social Security is.
Unfortunately, this financial foundation for seniors is crumbling before our eyes. A recently released report from the Social Security Board of Trustees suggests that in less than two decades’ time, the program we know today could undergo major changes, all of which would seem to be bad news for current and future retirees. Should Congress fail to make any changes to Social Security, up to a 23% across-the-board cut in benefits could be headed seniors’ way by 2034, per the report.
What exactly is wrong with Social Security? The following 10 stats help explain why this 82-year-old program is now broken.
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Years Have Passed Since Any Major Legislative Changes
Finally, place some of the blame on Congress. The last time any meaningful Social Security changes were passed into law was in 1983! The full retirement age schedule hasn’t been adjusted since the 1983 Amendment passed, and the income thresholds at which a portion of Social Security benefits becomes taxable has been stuck at $25,000 for individuals and $32,000 for couples filing jointly since 1983, too. Congress’s inaction and partisanship are hurting beneficiaries.
The upside is that Social Security can’t go bankrupt thanks to its payroll tax as long as people keep working, the program keeps generating revenue. However, the future is looking bleak for those 62% who lean heavily on America’s most important social program.
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The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
The Social Security Administration Readies To Announce Big Changes For 2018
As of July, more than 61 million people were receiving Social Security benefits on a monthly basis, and 42 million of those recipients were retired workers. According to recently released data from the Social Security Administration, a whopping 62% of these retirees, including half of all married couples and 71% of unmarried elderly individuals, relies on their monthly stipend to account for at least half of their income.
Therefore, as goes Social Security, so goes the financial foundation of tens of millions of Americans each year.
The program itself isn’t on the strongest footing. The 2017 report from the Social Security Board of Trustees projects that by 2022 it’ll begin paying out more in annual benefits than it’s generating in revenue from payroll taxes, interest income, and the taxation of benefits. By 2034, the nearly $3 trillion in one-time asset reserves is expected to be completely exhausted. Should Congress sit on its laurels, the trustees’ report opines that an across the board cut in benefits of up to 23% may be needed to sustain payouts through 2091. It’s not exactly the rosiest forecast for a social program that millions of seniors lean on.
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Eligibility For $16728 Social Security Bonus
If youre over the age of 65 and make less than $16,728 a year from other sources. Like an employer or retirement account contributions, then this is good news for you!
Eligibility requirements to qualify for your social security benefits include being born before January 1st, 1951.
If that doesnt apply to you, other income sources dont exceed $1572 in 2018. They will still give those eligible up to 50% back on money paid into their accounts during 2017. If total additional credits do not require them to exceed limits as defined by U.S. tax code section 86a-17.
The 2018 Social Security Benefit Formula
For people reaching the age of eligibility in 2018, your averaged indexed monthly earnings will be applied to the following formula in order to determine your Social Security benefit at full retirement age.
- 90% of the first $896
- 32% of the amount greater than $896, but less than $5,399
- 15% of the amount greater than $5,399
Also, bear in mind that this assumes that you’ll claim your Social Security benefit at exactly your full retirement age, which the majority of retirees don’t do. In fact, the most common age to claim Social Security is age 62 — as early as possible — and more than half of Americans claim at age 65 or earlier.
The Social Security Administration has formulas to determine benefit reductions and increases for any given claiming age, but just to mention the extreme cases, if your full retirement age is 67, claiming at 62 will result in a permanent 30% reduction, while waiting until 70 will result in a permanent 24% increase.
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The Program Will Lose $884 Billion In Annual Income By 2034
Social Security wound up generating $957.5 billion in revenue last year, which is more than it paid out to beneficiaries. In fact, it’s been more than three decades since Social Security paid out more in benefits than it generated in revenue in a year. Though payroll tax provides the bulk of revenue for Social Security , interest earned on the programs’ $2.91 trillion in asset reserves added $88.4 billion, or 9.2%, in 2016.
If Social Security begins paying out more in benefits than it collects in 2022, as predicted by the Trustees report, the programs’ asset reserves will begin to shrink. By 2034, they’ll be completely exhausted, meaning they will earn no more interest income, leaving lawmakers to replace even more revenue.
Social Security Isn’t A Magic Potion
While Social Security benefits can help boost your retirement income and add a cushion to your savings, you shouldn’t rely on them completely to make ends meet. The average beneficiary receives around $1,413 per month, which amounts to just under $17,000 per year. That’s not a lot to live on if you’re going to be completely dependent on Social Security to pay your bills.
To further complicate matters, there’s a chance that there will be cuts in Social Security in the relatively near future. According to the Social Security Board of Trustees, there’s currently more cash flowing out of the system than is coming in — partly as a result of the massive number of baby boomers retiring each day and partly because life expectancies are continuing to increase, depleting the program’s cash reserves. And by 2034, Social Security’s trust funds — which are currently preventing the program from running a deficit — will be exhausted. While that won’t lead to a collapse of the entire system , but it may result in cuts in benefits of up to 23%.
Of course, it’s possible Congress will figure out a solution before 2034 to avoid this problem. However, it’s better to be safe than sorry, and banking on the hope that it will all sort itself out by the time you retire is not the wisest decision. That’s why it’s still important to focus on your own savings outside of Social Security to strengthen your nest egg as much as possible.
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Myth #: Your Benefits Are Based Only On Wages You’ve Earned Before Age 65
How your Social Security benefit is calculated can seem mysterious. However, it’s important to know a few essential facts to aid your claiming strategy. You can use the tools on SSA.gov to do the calculations.
- Your benefit is calculated based on your highest 35 years of earnings they don’t have to be consecutive years or before age 65.
- If you work past age 65, those earning years will be included, so long as they are high enough to be part of your highest 35 years.
- Even working part-time after turning 65 may be part of your highest 35 years of earnings.
- To be eligible for Social Security, you must have a minimum of 10 years of covered employment , which equates to 40 credits in the Social Security system.
- If you don’t have 35 years with earnings, zeros will be included in the calculation.
Read Viewpoints on Fidelity.com: Social Security tips for working retirees
Useful Information & Links
– Guidance for those who missed the sign up deadline.
– Maine offers $285 surprise stimulus check to half a million residents.
– What is the maximum Social Security benefit for 2022?
Warren: Build Back Better will boost Medicare programmes
In recent months the soaring rate of inflation has affected household finances for millions of Americans, but Sen. Elizabeth Warren is confident that the Build Back Better plan will help to minimise some of those costs if passed. The bill will allow Medicare providers to negotiate drug prices with companies to help reduce their costs, and pass on the savings to recipients.
The Delta variant is a challenge
As the government tries to tackle the problem of an economy that is severely hampered at the moment, the Delta variant is spreading through the country. As it does so, there is a growing sense of doubt as to how best to revitalize the economy.
Some states with low vaccination rates are experiencing a spike in covid-19 cases that could dissuade people from taking service jobs in restaurants and other jobs that involve exposure to the public.
With the expiration of federal pandemic unemployment benefits on September 6th, a number of differing types of workers are now facing dire straits. Gig workers, part-time workers and others that typically don’t qualify for unemployment benefits are now unsure as to how they will survive the near future financially.
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What Is The $16122 Social Security Bonus
The Social Security Administration will pay a one-time, lump-sum bonus of $16,728. This bonus is giving to the current and some retired workers born in 1943 or later. The SSA announced on November 17th that it would issue the particular payment as part of its initiative to commemorate the agencys 80th anniversary this month.
To be eligible for the social security bonus, you must have earned at least 40 credits under your work history. With them plus meet certain age thresholds before turning 65 years old, which is October 15th, 2019. Depending on when you turn 70 years old by the following year 2020. In addition, you can collect full benefit if you are receiving less than full retirement benefits but not living abroad. While those already collecting SSI cannot accept.
Don’t Miss Out On This Social Security Benefit Bonus
Social Security will soon close a benefit loophole that once enabled married couples to squeeze more money from the system — potentially tens of thousands of dollars per couple.
Before describing this strategy — known as “file and suspend” — here are some important deadlines you need to know:
- You’ll still be eligible to file and suspend under the old rules if you were born on or before April 30, 1950. If you were born after this date, you’ll be able to file and suspend for other purposes, but you won’t get the special advantages for married couples.
- To file and suspend under the old rules, you need to file with the Social Security administration no later than April 29, 2016.
Due to the potentially high volume of people contacting the Social Security administration during this period regarding this benefit, if you’re eligible and want to take advantage of this strategy, it may be better to file online at www.ssa.gov.
What’s the file and suspend strategy that’s being eliminated?
When you attain your full retirement age , currently 66, you can file to start your Social Security benefits but then immediately suspend them. This allows your benefits to continue to increase at 8 percent per year until age 70. For many workers, delaying the start of their benefits until age 70 increases the payments they may receive over their lifetime, and it can increase survivor’s benefits after they pass away.
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When Should You Start Collecting Your Social Security Checks
Your retirement benefits, including social security checks, are calculated on the basis of different factors. For instance, some depend upon your earning amount, and some are simply fixed. The earlier you start collecting your checks, the less will be the amount you receive. The key takeaway here is, the more you delay, the more extensive the checks will be.
How You Can Make Your Checks Bigger
Since it does make sense for most of us to start collecting early, don’t think that that will shortchange you. For one thing, the system is designed so that if you live an average-length life, you’ll collect the same total benefits no matter when you start collecting them. After all, if you start early your checks will be smaller, but you’ll receive many more of them.
Here are some ways to increase your Social Security benefits:
When it comes to retirement income, Social Security is vitally important for most Americans, so spend a little time thinking about when you’ll want to start collecting, finding out how much you can expect to receive, and taking any steps you can to increase your ultimate benefits.
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When It Pays To Wait
Of course, not everyone can wait until age 70 to start claiming benefits. Maybe you lost your job or had to retire early because of health issues, and you needed to claim benefits earlier than you anticipated just to get by. There are also a few other scenarios when claiming benefits early makes sense — for example, you may have reason to believe you won’t live much longer than age 70, or you may want to start receiving Social Security benefits while you’re young enough to travel or otherwise enjoy that extra income.
If you wait until 70 to claim, though, you will receive significantly bigger checks for life. By waiting until your full retirement age, you’ll receive your full benefit amount. If you claim early, your benefits will be cut by up to 30%. Wait until age 70, though, and you can receive up to 24% on top of your base benefit amount.
Say, for example, your full retirement age is 67 and you’d be receiving $1,400 per month if you filed at that age. If you claim at 62, you’ll see a 30% reduction in benefits, leaving you with just $980 per month . But if you wait until age 70, you’ll get 124% of your base benefit — or $1,736 per month . That may not seem like a dramatic difference, but it adds up over the years: