10 ideas to fix Social Security
Attached below is a good article that talks about ways to fix Social Security. Note, there is enough money to pay 100% of benefits to future retirees for the next 20+ years.
The system will need to change in the future since there are more Americans retiring. The questions is how to fix the system? Who will be impacted? Remember, a small change to payroll tax or a change to full retirement age could fix the problem easily.
Again, don’t forget the it took 7 and then 17 years to implement the last two large overhauls to Social Security after change was announced. There will be change, but it will not happen very fast.
Focus in the right place to get more
Will you receive more out of the system than you put in? – lots of banter about this article today, see below. Progressively more Americans will pull more money out of Social Security than they paid in.
This is NOT new news, right! We know there are more people retiring than workers paying into the system. Change has to happen. The key take-away is figuring out:
The current research and history shows that if you are in your late 50s or older, you are not likely to be impacted. Remember the government does not act very fast. The last big overhauls to the system took 7 and then 17 years to implement. Also, there is coverage to pay benefits out at 100% for another 21+ years given the last funding update analysis.
So, let’s “run the numbers” and “compare” different scenarios to find the best strategy for your situation and your view on any changes in the future.
Maybe I’m too simple. Why should we focus on how most people won’t get all their benefits out of the system. This is negative…the focus should be on how do we educate and inform American’s so they can get the most benefits possible out of the system.
We take the mystery out of this process by showing you your numbers and working with you to create a personalized strategy based on 4 years of intensive research in this area.
Run your numbers to create a strategy….”Get More.”
If You are Under 40, Do Not Bank on Social Security
Quoted in the Wall Street Journal – over the weekend I was quoted in the WSJ…I think the title of the article is funny. “If You’re Under 40, Don’t Bank on Social Security.” http://online.wsj.com/article/SB10001424052702303592404577362204167117454.html#articleTabs%3Darticle
The key is that there is a lot of misinformation about impact if you are over 50…the bottom line is that if you are close to retirement, use the existing rules and evaluate how you get all the money you are entitled to. You might be surprised that a few small maneuvers could result in a lot more money to live on in retirement.
We have smart tools on www.socialsecuritysolutions.comthat allows you to see how to maximize your benefits and “compare” other claiming dates you think fit your plans.
Meyer quoted on CBS MarketWatch
Finding patience in a firestorm is very hard…I’m quoted in an article today about Social Security. The “story of the day” is the funding of the US entitlement programs. People, this is old news….nothing is really different. These results were expected by the specialists and experts running the program.
Yes, the system will need to change. The key issue for you is ”what is your plan related to Social Security?” Many people see the media spin on all the negative news and take benefits early thinking they will “take their money and run.” I suggest this might make sense for some, but a thoughtful evaluation might result in a different strategy for you.
The system is not likely to impact or change over night given the complexity, the fact the government can’t move quickly to implement anything, and finally the political fallout. All the experts say near-term retirees should use the current rules to evaluate their options related to Social Security.
There is no contesting that you can find a lot more money by creating an strategy to pull your benefits out of the system in a smart way. We have shown this in the leading academic journals with our research.
I conclude by admitting that I am not a very patient person. And, in an environment of “fear” it is easy to make rash financial decisions. Don’t do it. It could cost you dearly. Hire an expert to help you see how to take your Social Security and integrate it into your financial plan.
Finally, if you have a component of delay in how you take your benefits, watch the news over time. We have developed a system to do this for you and notify you about impending change and the impact to your plan. Let your advisor “watch out for you.”
So, run your numbers and get informed about the recent news. But, don’t overreact or be emotional as you might leave a lot of money on the table.
Perspective on the Funding of SS from an expert
More context on the recent funding report on Social Security – attached is a report by Alicia Munnell. I have a lot of respect for her research. If you are interested in details of the funding, it is worth skimming.
However, I cut and paste the 2 most important take-aways:
“The program faces a manageable financing shortfall over
the next 75 years, which should be addressed soon to
restore confidence in the nation’s major retirement
“While Social Security’s shortfall is manageable,
it is also real. The long-run deficit can be eliminated
only by putting more money into the system or by
cutting benefits. There is no silver bullet. Despite the
political challenge, stabilizing the system’s finances
should be a high priority to restore confidence in our
ability to manage our fiscal policy and to assure working Americans that they will receive the income they
need in retirement.”
New numbers are just out on Social Security funding
Well, the media has been calling me and asking for comments. If you did not see the announcement, I’ll post the press release below.
The take-away is that the projected Social Security Trust fund is forecasted to be exhausted 3 years earlier than expected. Last year they said 2036 and now they say funds will run out by 2033 if no changes are implemented.
Here is a note I just sent a well known reporter, see below. Again, the bottom line is that changes is needed, but this should NOT impact you if you are older than 55 years of age.
“Well, I’m sure you have seen the results. I’m a bit worried the media will continue to use scare tactics. It is obvious to everyone that the system will need to change. The question is who will be impacted and how as an industry we should counsel impending retirees. I still contend if you are over 55, you are not likely to be impacted by change. This is consistent with most experts’ guidance. Three important elements should be evaluated: 1) any change has always taken a long time to implement (7 and 17 years off the last big adjustments), 2) there is a precedent that existing Americans who have already claimed will be grandfathered (not impacted by future change), and 3) the “sky is not falling.” As perspective on the new numbers — 100% funding until 2033 minus 2012 is 21 years of full funding. If we subtract this from the earliest some can file (62), it means based on today’s announcement someone 41 years old is fully covered. Note, this is a different message than the media sends. Here is my advice: a) plan that there will be change (discount your benefits off current assumptions if you are <55 yrs), and b) if you are over 55 run your numbers and evaluate SS strategies that can add up to $200,000 for for the typical couple. If a delay strategy is part of your plan, watch and see how things progress. It is likely we will have signs of any impending and material change which we can then adjust a strategy to. Again, this is the government. I suspect it will take some time for all the details to be worked out regarding future change.”
Putting the hoopla to rest that Social Security is going away
April 23rd we get the new numbers on the funding status on the Social Security Trust Fund.
As we have reported, the “sky is not falling.” This article predicts rosier news from Trustees on the funding status. The media has confused a lot of people into thinking taking benefits as early as possible is smart. The system will need to implement changes over time, but people over 55 years of age are likely to not be impacted.
Here is a quote from the article below regarding a new educational campaign to broaden education in this area, “The Campaign says the trustee report will also help put to rest the “misunderstanding” that Social Security has entered a cash deficit situation where it is paying out more in benefits than collecting in income. “Social Security is prohibited by law from doing that. It can only pay benefits if it has sufficient income to cover all costs. If there were less income than outgo this year, the Trustees would be reporting that benefits would not be able to be paid in full during the remainder of 2012!,” the Campaign says.”
Every speech or interview I give on Social Security the topic of “funding status” or that Social Security is going bust comes up. I will be relieved to have more people and data to help you feel confident that your Social Security is not going away. The bottom line is that you should figure out how to maximize your benefits to get the most money out of the system.
Social Security Trustees Will Report Large, Growing Surplus: Advocacy Group
The sky is NOT falling
Every day we see the media talking about Social Security. Unfortunately, a lot of misinformation is being spread about the viability of Social Security. The bottom line is that Social Security is NOT going “belly up” any time soon. Yes, it needs to change, but it is a remarkable program that American’s can continue to rely on.
I recently received a great Fact Sheet from the AARP Policy Institute that talks about the Social Security Trust Fund (http://www.aarp.org/content/dam/aarp/research/public_policy_institute/econ_sec/2012/Social-Security-Whos-Counting-on-It-fs-252-AARP-ppi-econ-sec.pdf).
As reported by AARP and the Social Security Administration, the Social Security Trust fund can pay out 100% of benefits through 2036. Let’s do the math…2036 minus 2012 equals 24 years. If the earliest you can file is 62, let’s subtract 24 from 62 which equals 38. So, according to real data and actuarial projections, there is enough money to pay 100% of benefits for someone that is 38 years old or older.
Note, it is clear that change will be need to Social Security. However, the “sky is not falling.” In our book, we say that individuals over the age of 55 are likely to not be impacted by impending changes. This is consistent with other experts and academics that study Social Security.
The bottom line is that regardless of your beliefs of the future of Social Security, do some calculations to see the difference between claiming strategies. You will shocked at the differences. Make an informed decision and you may be able to find thousands of more dollars to support you in retirement.
Overall, I’ll leave you with one more thought. Remember the last 2 major Social Security overhauls were in 1977 and 1983. In both cases, it took 7 and 17 years, respectively, from the time the changes were announced to the time they were implemented.
My personal belief is that if you are over 55, you won’t be impacted. Even if a change is announced, it is going to take some time before it is rolled out to all Americans. Sign up for our service to run your numbers. Also, sign up for our newsletter so we can keep you informed of the status of Social Security funding levels.
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