“At a time when more Americans rely on Social Security than at any other time in the program’s 86-year history, political brinkmanship and alarmist headlines are undermining public faith in the nation’s bedrock retirement system. Those concerns are tempting some people to grab their benefits as soon as they can.”
“But claiming Social Security benefits early out of fear has a similar result to selling stocks in a down market: It turns perceived losses into real ones.”
Mary Beth Franklin, “Managing your clients’ expectations around Social Security,” Investment News, October 25, 2021
The Takeaway: Scary headlines can lead retirees into believing the nation’s Social Security program may soon be insolvent, but that’s not the case. As Franklin reports in her article, ongoing revenue from Social Security payroll taxes are sufficient to cover about 78% of scheduled benefits, even when the trust fund reserves run out. And it is extremely likely that before that point, Congress will step in with plans to cover the shortfall.
In most cases, it pays to wait to claim Social Security benefits due to today’s longevity concerns (and in most couples, it pays to wait to claim at least one of the two benefits). Ask your advisor to run a detailed analysis for you so you can make an informed decision. The difference between claiming smart – or not – can add up to tens of thousands of dollars over your lifetime.
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