Seniors in Need of Money Now are Worried about Social Security
Social Security benefits are crucial
Senior citizens needing money now are worried that Social Security benefits won’t be around for much longer. Studies show that Social Security benefits make up for about 40% of retirees’ income. It’s no secret that many Americans have come to rely on the benefits to pay their monthly bills. Without it, they would be hard-pressed to maintain their current quality of life.
Government experts are saying that the Social Security fund will be tapped out in coming years. They have noted that tax receipts will start to fall short of outlays by 2016 and the long-term surplus of the fund will be drained by 2037. This has been much cause for concern with baby boomers who are quickly approaching the age of retirement and worried about money.
Is the Social Security fund gone?
Though the government admits that the Social Security fund will reach lows in coming years, they insist that benefits will not be eliminated. In fact, the fund will still be able to deliver about 75% of scheduled benefits. In addition, the gap between viable payouts and full payouts isn’t huge. It’s only about 2% of the national wages. That could easily be funded by small tax increases or a reduction in benefits for retirees.
How are benefits calculated?
Many Americans are concerned about the fund and wondering if they should include Social Security benefits in their retirement budget plan, and if so, how much. The answer begins with looking at how the payout is calculated. It’s an algorithm of how long a person worked, adjusting their annual earnings for inflation, averaging the highest 35 paid years of service and then replacing a portion of their average income with monthly payouts. The next factor is the timing. People can claim their full benefits between 65 to 67, or continue to work until they are 70 for maximum benefits.
Studies have shown that in today’s market people normally collect money as soon as they can. In fact, half of all men claim their Social Security benefits by the age of 63. There are some strategies though that can be used to sustain money now that the economy is strained. First, if a spouse retires, the other spouse can claim spousal benefits but continue to work. They can switch to their own benefits when they retire. This is a good strategy because it allows consumers to build up more credits.
Second, when a worker reaches their full retirement age they can claim benefits, but suspend their payments until a later time. That way the value of future payments continues to grow. If the other spouse claims benefits immediately, that allows the other to grow steadily. Both strategies are good ones to have to maximize the payouts consumers are entitled to.
Managing Social Security
Managing Social Security is still an issue for retirement age Americans. Though funds are depleting, the government has tools to build up the Social Security fund. Retirees who need money now have options. It may take some strategizing, but with careful planning they can maximize their benefits.