Is Social Security safe to rely on?

In our opinion, it is.

There’s a lot of talk in the news that the Social Security trust fund is set to deplete in 2035. And this makes current and future beneficiaries worry about Social Security maintaining its ability to pay out benefits.

However, the trust fund depleting does not mean that Social Security will disappear completely. It means that if nothing changes your benefits could decrease slightly.

Social Security benefits are funded by tax payments from current workers. These tax payments cover about 75-79% of benefits and the trust fund makes up the difference. If the trust fund runs out, the worst that would happen is your benefits decrease to 75-79% of their original amount.

This, of course, is not an ideal situation. However, for such an important piece of your retirement income, it’s vital to see the larger picture. Obtaining 75-79% of your full benefit amount wouldn’t be preferred, but it is better than losing them altogether.

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Is there anything that can be done to protect my full social security benefits?

Yes. Congress is working right now to protect your benefits. Social Security provides millions of Americans with retirement income, so the lawmakers are incentivized to come up with a solution and to come up with one quickly.

Additionally, there have been some recent changes to eliminate “unintended loopholes” that were created by the code. These changes increased the lifetime of the Social Security program. If you’re currently receiving benefits, these changes won’t affect you.

There are a number of proposed changes to help protect your benefits. One solution currently on the table is to increase the amount taxpayers pay in. Another is to perform a means test, which would reduce or eliminate benefits for those with substantial retirement income or retirement assets as defined by a government standard. Yet another option is to reduce the cost of living adjustments, and not match the benefits to the rate of inflation.

The least likely option, in our opinion, is to reduce benefits.

So, should I file for social security early or late?

Filing for Social Security is one of the most important retirement income decisions you will make. And we think that it shouldn’t be reduced to an “early or late” decision. There are multiple ways of filing, and depending on your choice, you could add or lose up to $100,000 in benefits.

To find the most accurate filing strategy for you requires a full analysis of your entire financial picture.