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Social Security Planning

Deciding When to take Social Security will impact the Quality of Your Retirement

Deciding when to take your Social Security benefit is one of the most important decisions you will make about your retirement.  It is even more important if you are married or a domestic partner, as the timing of when you both take your respective benefits can have a huge impact on the total amount of benefits you receive over the course of your collective lifetimes.

New estimates from the government estimate that the "Social Security Trust Fund" is now in deficit funding (more is going out, than is coming in) has projected that the "Social Security Trust Fund" will be drawn down to zero (0) by the year 2032.   Less than 10 years ago the projected draw down date was estimated to be 2052.  Why that has happened is a discussion for another time and place.

If the "Social Security Trust Fund" runs out of money, What happens to your Social Security benefits?  The projected worse case scenario, is that unless some type of long term adjustment is made to the Social Security system, that beneficiary's Social Security Benefits will have to be reduced by 25 - 30%.  So if you are currently getting $1,000 per month, that benefit payment would be reduced to $700 - $750 per month.  

Does your current retirement plan, have this reduction in Social Security Benefits built into it's projections?

When It Was Created

Eligible Age - 65

Average Life Expectancy - 60

Beneficiary - Individual Only

Cost of Living Increase - Act of Congress

Cash Flow - Positive (insurance model) creating pool of excess funds that will be used in future to pay benefits.

Benefits Today

Eligible Age - 62 (reduced benefits)

Average Life Expectancy - 84

Beneficiary - Individual, Spousal, Widow, Divorced, Dependent Children

Cost of Living Increase - Beginning in 1975 Automatic COLA (maybe)

Cash Flow - Negative (more funds are going out in benefits than are being deposited).  Expected to run out of the "Trust Fund" pool of bonds by 2032 or 2034.

When we began providing financial planning services, the expected draining of the "Social Security Trust Fund" was projected to not take place until 2052.  In the past 15 - 20 years, the projections have moved the shortfall up 20 years, and there is a real possibility that those projections will continue to move closer and closer.

Click to See Social Security Budget History

Legislative / Economic 

Economic Impact - World's Population has doubled during our lifetime, Zero percent interest and even negative (-) percent interest lending, no cost of living adjustments 3 out of the past 5 years, with minimal increases (losing purchasing power).

COVID-19 Impact - during the pandemic the collection of Social Security Taxes was postponed.  We had huge layoffs (reduced amount of Social Security Taxes collected) and about 25% of our workforce has continued to be without jobs (also reducing the amount of Social Security Taxes collects).

Budget Act of 2015 - Congress removed the ability to "File and Suspend" (primarily used for spousal benefit planning, and just in case planning).  Congress threatened to do this because it did not like that individuals were practicing their right to maximize their Social Security benefits. 

CLICK HERE to see the changes

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