Many of today’s workers are not sure if Social Security will still be solvent by the time they retire. According to the Employee Benefit Research Institute, six in ten U.S. workers are not confident that Social Security will continue to provide benefits of equal value to what today’s retirees receive. This lack of confidence is for good reason--the Social Security Administration has stated that by 2034 they will only be able to pay 79% of scheduled benefits.
A few things can be done to extend solvency, including increasing the full retirement age to 69 and eliminating the income cap that shields earning above $128,400 from Social Security tax. However, this will require the political will to do so.
The Social Security Administration states the maximum benefit for today’s retiree equals $33,500 yearly. This only replaces 40% of an average employee’s income.
This is when proper financial planning becomes essential.
Collecting Social Security earlier will reduce your benefits, while waiting will increase them. However, if you opt to wait, you will want to make sure that you have enough to cover you in the years before you collect. Looking at factors such as marital status, family health (longevity) history, and other assets (such as rental income) with a financial advisor will help you determine whether you can afford to defer collecting.
Generally the longer you think you may live, the better it is to defer collecting Social Security. This will surely be the case when workers who are now in their 20s and 30s decide to retire. If longevity does increase, they should still have decades of retirement to enjoy.
It is important to discuss Social Security and other benefits when it comes to your financial planning strategy. To get started today, please call us at 515-557-1860 or email us at firstname.lastname@example.org. TABER Asset Management is a fiduciary and is based in Des Moines, IA, serving clients across the U.S..