Social Security has increasingly become a significant concern among Americans due to the possibility of cuts to the program in the years ahead. A recent study by Newsweek shows that 50% of Americans have significant worries regarding the future of Social Security retirement benefits, while an additional 40% are “fairly” or “slightly” apprehensive. The trust funds for the Social Security Administration’s Old-Age, Survivors, and Disability Insurance (OASDI) program are depleting, and the SSA’s Office of the Inspector General has cautioned that benefits may be reduced by 21% by 2034 if a proper resolution is not reached promptly.
According to the Committee for a Responsible Federal Budget (CRFB), a couple retiring with a “medium income” in 2033 could see a decrease of up to $16,500 in their Social Security benefits, while a single person with a medium income may face a loss of approximately $12,400. Nonetheless, despite the looming crisis, Social Security has not been a priority for either Vice President Kamala Harris or former President Donald Trump in their respective campaigns, nor have they laid out definitive plans to tackle the impending funding gap. Polls conducted in October reveal that 44% of voters have more faith in Democrats to safeguard Social Security, as opposed to 34% who favor Republicans.
Stephen Kates, a senior financial analyst at RetireGuide.com, noted his surprise over the lack of a definitive position from both Trump and Harris on this matter, especially given the potential for Social Security reductions in the upcoming decade if politicians do not take action. This absence of clear initiatives from either significant political party has left many Americans feeling uncertain about their financial futures as they near retirement. A recent survey indicates that 73% of non-retired Americans are worried that Social Security may not fulfill their benefits if the retirement trust fund runs dry.
Financial advisors recommend delaying the claiming of benefits to maximize the monthly payment amount.
Concerns over the future of Social Security
Individuals may start claiming Social Security benefits as early as age 62, although this comes with a lifelong reduction in the benefits received.
Opting to wait until reaching full retirement age—between 66 and 67—ensures the complete benefit amount, while postponing until age 70 can provide an 8% increase per year. George Gagliardi, a certified financial planner and founder of Coromandel Wealth Strategies, suggests that his clients should wait until they turn 70 to claim benefits, unless there’s an emergency that requires earlier access. He believes that lawmakers in Washington are likely to tackle the solvency issues surrounding Social Security before the trust funds are exhausted.
More than half of non-retired adults in the US (53%) believe they will have to rely on Social Security to cover essential expenses. Among individuals aged 60 and above, 69% reported they would depend on Social Security benefits, with 47% claiming they expect to be “very reliant.”
The benefits received from Social Security depend on various factors, such as the average earnings over a 35-year career and the age at which one begins to collect benefits. Under current regulations, a 54-year-old with average “medium” earnings can anticipate Social Security replacing approximately 40.9% of their pre-retirement income if they retire at 67.
However, these benefits could decrease to just 32.2% of pre-retirement income if no measures are taken to rectify the program’s anticipated revenue shortages. As concerns about the future of Social Security grow, Americans are increasingly anxious about their retirement security. It is essential for politicians to address these challenges and provide concrete strategies to ensure the long-term viability of the program.
