Social Security is far more complicated than most people realize. The decisions baby boomers make now can have a tremendous impact on the total amount of benefits they stand to receive over their lifetime.
Social Security in the Future
In October I presented two seminars on Social Security planning, and I was really interested to discover that almost everyone's question was, "Would Social Security still be there for me?" Even before people asked, "How much might I get?" -- the big concern was could they really count on it to last their retirement.
Funding Social Security
Social Security is a "pay-as-you-go" program. Essentially the money collected from wages today pays for the current Social Security benefits for retirees. Money that is left over after Social Security has paid out benefits goes into a trust fund. The trust fund is invested in special US Treasury bonds, and the US Treasury is one of the safest investments in the world. Right now, it is anticipated there is enough funding through 2034. After that year, without changes to the system, benefits could be reduced to 70% of paid benefits.
Do this now if you haven't already. It is important to keep track of the income reported, and also to make sure your account has not been accessed. Social Security makes signing up for this account a bit challenging for your protection. Before starting the process it's important to have collected or know about your financial history from loans to credit cards. Just like a credit check, Social Security does it's due diligence to try and protect your account.
Caregivers and Social Security Benefits
Social Security has a number of calculations to determine the amount it will pay to an individual, and a critical ingredient of that formula is the highest 35 years of earned income. If you stayed home to care for a loved one, an elderly relative, or children; it can take a chunk out of those earned income years. The advice in that situation is to put in more years of work, which will help catch up a bit of benefits; especially if you have a high paying job now. You can boost your benefit with extra time in the workforce and the future you will say thank you.
Additional Social Security Questions
- When should I apply for Social Security?
- How can I maximize my benefits?
- Will Social Security be enough to live on in retirement?
Talk to a Retirement Income Planner Before Making Big Decisions -- Give a call or an email! I can help you with the big questions!