Social Security Benefits Face Potential Cuts
Retirees need to understand changes to make informed choices.
The Social Security Administration’s trust fund is expected to be depleted by 2033, a year sooner than previously projected, which could lead to benefit reductions. Understanding the factors influencing Social Security is critical for retirement planning.
Trust Fund Shortfall Looms
The Social Security Board of Trustees announced in its 2024 annual report that the trust fund is now projected to run out of funds in 2033. Consequently, retirees could see their benefits slashed by as much as 23% if Congress doesn’t act.
For example, the average monthly benefit of $2,000 could be reduced by $460, resulting in a loss of $5,520 annually. Over 20 years, that could total over $110,400 in lost income.
Maximizing Your Benefits
Economist Laurence Kotlikoff’s research indicates that 94% of Americans claim Social Security at the wrong time, costing them an average of $182,000 in lifetime income (research from economist Laurence Kotlikoff). Claiming benefits at the optimal time is crucial, especially with potential cuts on the horizon.
According to an article for NASDAQ, the Social Security handbook contains 2,728 rules about benefits. Successfully navigating this complex system is challenging.
Social Security was already confusing. Now it’s a financial minefield – and one simple misstep could cost you tens of thousands of dollars, or more.–Ryan Thacker, B.O.S.S. Retirement Solutions
Pitfalls of Standard Advice
While conventional advice suggests waiting as long as possible to claim benefits, this strategy may backfire because taxes, Medicare premiums, and the risk of trust fund insolvency must be considered.
You could be taxed on up to 85% of your Social Security benefits, depending on your total income. Also, a larger benefit could increase your income above certain thresholds, potentially doubling or tripling your Medicare premiums. Furthermore, if you delay your benefits to age 70 and the trust fund is depleted, your higher check could still be cut.
It’s time to throw out the old playbook. Filing for Social Security isn’t just about your age. It’s also about your taxes, income, longevity, and now… insolvency risk.–Tyson Thacker, B.O.S.S. Retirement Solutions
Personalized Strategies
To ensure you receive the maximum income when you file for benefits, consider a customized Social Security analysis tailored to your situation. For instance, according to the Center for Retirement Research at Boston College, delaying retirement until age 70 can increase Social Security benefits by as much as 24% per year (CRR Report).
Ryan Thacker from B.O.S.S. Retirement Solutions emphasized the importance of reclaiming the contributions made to Social Security over the years. Between you and your employer, you’ve contributed 12.4% of every paycheck to Social Security. Add that up over four-plus decades and it’s a massive number. We want to help you get it back — before Washington figures out more ways to take it away.
B.O.S.S. Retirement Solutions offers a customized analysis, free for Utah residents, that considers various factors, including age, health, taxes, and retirement income. This analysis aims to help individuals maximize their Social Security benefits.
