There are many theories as to how it might unfold, but for now, your best option is to get to know the current system. That way, you’ll better understand future changes.
HOW MUCH WILL YOU GET?
Your best tool is Social Security’s retirement estimator. You also can create an account at SSA.gov to see your actual earnings record and projected benefits based on real data. The closer you get to retirement age, the more accurate these estimates will be.
Children and spouses may receive benefits from a family member’s Social Security. People who have significant income from work, interest or dividends in addition to their benefits may pay taxes, however no one pays taxes on more than 85% of their benefits.
Currently, benefits are automatically increased to keep up with rising cost of living. This is an area where policy changes might be made.
WHAT IS RETIREMENT AGE?
Today’s retirees can start taking Social Security benefits as early as 62. However, these early withdrawals are reduced by as much as one-third of what they would be if benefits were delayed until full retirement age (FRA). People who wait until age 70 can receive a benefit up to one-third more than their FRA benefits. Raising the FRA is another way that Social Security might make up some of its shortfall.
WATCH YOUR BENEFITS
The best thing you can do now is create a My Social Security account at SSA.gov and monitor your records. Watch your earnings to correct any mistakes and keep an eye on your benefits as you get closer to retirement. Things that will affect your benefits include:
- Earning more or less money from year to year
- Working fewer than 35 total years
- Your age when you start taking benefits
- Cost-of-living adjustments to keep up with inflation
- Military service, railroad benefits or other work where you do not pay Social Security tax
THE FUTURE OF SOCIAL SECURITY
By the year 2035, the number of Americans 65 and older will rise from about 49 million today to more than 79 million. With this increased demand for benefits, there is no question that Social Security is going to change. What remains to be seen is exactly how future retirees will be affected. Your best bet now is to get to know the system as it is.
As always, we’ve got your back. — The On Your Own Team
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