If you’re like most people, Social Security will provide 40 percent of your income during retirement. Unfortunately, without changes, the federal government may not have enough money in 16 years to fully fund the program. The Social Security Administration (SSA) paid $952 billion in benefits in 2017; and received $911 billion in taxes and $85 billion in interest earnings.
Social Security’s costs have exceeded revenue from payroll taxes since 2010, but interest income has covered the difference. However, Social Security is on track to run a $2 billion deficit in 2018. If the deficit continues, SSA officials said asset reserves in the Old-Age and Surviors Insurance program will be exhausted by 2034. SSA will reduce benefits by 23 percent and will make payments strictly from payroll tax revenue. SSA officials are encouraging Congress to take action. Fortunately, you don’t have to wait for Congress to improve your financial future.
You can take proactive steps to provide retirement funds and avoid depending heavily on Social Security. Social Security Tactics Experts recommend waiting until you’re 70 to take benefits. After age 62 and before age 70, benefits are temporarily reduced $1 for every $2 earned over $15,480. If you wait to retire, your benefits continue to be adjusted upwards each year.
The expected shortfall has future retirees contemplating applying for benefits sooner rather than later. Retirees often need more money early in retirement when they want to travel and pursue hobbies, so taking the money early may make sense.