With the Social Security trust fund facing funding issues by 2033 (at this point at least), I've been considering what this means for those like me who hope to retire after this point. The Social Security Administration is projecting funds enough only to pay about 75 percent of estimated benefits after this date, which could leave those of us in the 50 and under crowd hurting. But I'm not waiting around to see what will happen. I'm taking steps to prepare for this shortfall now.
Reducing benefit expectations
Even now, with several decades before we can even contemplate full retirement, I factor in estimated Social Security benefits into our overall financial plan. I utilize information gathered from our online benefits statements at the Social Security Administration's website for this data. However, at this point, the SSA doesn't factor in the potential 25 percent reduction in these benefits, but I do, just to be on the safe side.
Stoking the fire of other investments
While it might not be possible, we're at least attempting to work toward a retirement in which we are not dependant upon Social Security income just in case is isn't available or isn't available in the amounts we'd planned upon.
In so doing, we're working to put money into other investments or assets areas like our home that we've paid off, and our retirement accounts. This way, as we enter retirement, we hope to have a diversified investment strategy and go in with little or no debt.
Taking Social Security ASAP
I've taken our estimated benefit numbers based on retirement ages of 62, 67, and 70 and run them forward over time (not including cost of living adjustments) to an age of 80 for both my wife and I. By doing this, I've found that there is very little difference in the overall amount of benefit money we would earn over time. Sure, the payments at age 62 are smaller than they might be if we took them at age 67 or 70, but the number of these smaller payments we receive is higher due to the extended timeframe. Therefore, we've determined at this point at least, that at least one of us will likely start taking Social Security benefits as soon as possible.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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