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Social Security: Answers to two basic questions

Get answers now. Because retirement shouldn’t be stressful.

People approaching retirement usually have two questions about Social Security: “Will it be there for me?,” and “When should I start taking Social Security benefits?”

Social Security: Will it be there?

Social Security’s long-term financial health has received plenty of press. But if you’re 50 or older, you’re less likely to be significantly affected by the system’s financial challenges.

If you’re wondering whether Social Security will be there for you, keep in mind:

  • Social Security benefits are projected to be fully payable until 20341
  • Social Security is politically sensitive. Older voters – the people receiving Social Security benefits – have very high voter turnout rates. Politicians are unlikely to reduce benefits for those currently receiving or about to receive benefits. Changes are more likely to affect future recipients.
  • At some point, inaction will be too risky. In 1983, Social Security was thought to be months from running a deficit. Democrats and Republicans came together to make changes that could sustain the system for several more decades. In 2015 the Bipartisan Budget Act included a section intended to “close Social Security loopholes.” Demographic trends continue to work against the system’s finances, and further changes will be necessary.

Social Security and your retirement

71% of Americans fear Social Security could run out in their lifetimes.2 Experts agree this is most likely not the case, but action shouldn’t be delayed by lawmakers.2 Although tax and benefit changes are most likely to affect younger workers, if you are nearing retirement age, you still may wish to use conservative assumptions in planning how to use future Social Security benefits. A solution that creates a financially sustainable system is likely because of the potentially catastrophic impact of doing nothing. The program’s scope, the number of people who rely on it as their main source of income, and the range of options for addressing financial shortfalls should eventually spur action to make improvements.

Social Security: When should I take it?

The second most frequently asked question about Social Security is when to begin receiving benefits.

A few facts

  • Qualifying workers born before 1938 are eligible for full benefits (their “full retirement age” in Social Security jargon) at age 65. For anyone born between 1943 and 1954, full benefits begin at age 66. As the chart shows, the eligibility age goes up gradually with year of birth, topping out at age 67 for anyone born after 1960.
  • Those who wait until after full retirement age to start receiving payments receive annual benefit increases. Benefits go up 7-8% each year a worker waits (up to age 70) after qualifying for full benefits.
  • Benefits can be received as early as age 62. Payments are reduced about 6% annually for each year benefits are received before the worker’s full retirement age. Someone receiving Social Security at age 62 with a full retirement age of 66 would find their benefits about 25% lower than their full retirement age benefit.
  • If you receive Social Security payments before your full retirement age and continue to work, your benefits will be reduced. Benefits are reduced by $1 dollar for every $2 you receive above a preset limit, which adjusts annually. Once you reach the full retirement age, you can receive benefits with no limits on earnings.

Year of birth

Full retirement age

1937 or earlier 65
1938 65 and two months
1939 65 and four months
1940 65 and six months
1941 65 and eight months
1942 65 and 10 months
1943-1954 66
1955 65 and two months
1956 65 and four months
1957 65 and six months
1958 65 and eight months
1959 65 and 10 months
1960 or later 67

ssa.gov

While some experts recommend delaying benefits as long as financially possible,3 there’s no one answer for everyone. The best age for you to begin receiving benefits depends on a number of factors, including when you plan to stop working, how much you’ve saved, your health, your marital status, what your spouse earns and other factors. This is such an important decision, you want to get it right. It’s a good idea to draw on the expertise and independent perspective of a financial professional to help you determine your best approach.

What you can do

Go to ssa.gov to create an account so you can view your earnings on which you paid Social Security taxes and the estimated retirement benefits you may receive in the future.

Think carefully before deciding when to receive Social Security benefits. This is one of the most important retirement decisions you’ll make. Your financial professional can help.

Monitor the news on Social Security and potential changes to benefits and taxes. You’ll want to consider the source of Social Security news and information. Use the official Social Security website, ssa.gov, for benefit and program information.

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1. “How much longer will Social Security be around?” AARP.com, September 1, 2021.

2. Konish, Lorie. “71% of Americans are worried Social Security will run out of money in their lifetimes. Why experts say that won’t happen,” CNBC.com, July 6, 2021.

3. Brooks, Rodney. "5 reasons to claim Social Security at age 70," U.S. News & World Report, November 30, 2020. 

This is a general communication for informational and educational purposes. The materials and the information are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. If you are seeking investment advice or recommendations, please contact your financial professional. You should consult your tax advisor regarding your own tax situation.

DOFU 10-2021
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