SS reduction in payments?
Can I ask a very general question? I heard on the radio that the Covid related
government expenditures may quicken Social Security‘s first ever reduction in monthly payments. I am 52 will turn 62 in 2030. The first reduced payment is in 2035. I was not intending to take Social Security until age 70. However, would it make sense to take Social Security at age 62 to get five or so years before the reduced payouts begin? I am sure this question must be pondered in financial circles now. Thank you for your time.
Terry Says
OK, let’s get the facts straight. This is NOT about any proposed reduction in payments. It’s just that the “Social Security Trust fund” will reach a point where more money is being paid out than is coming in at some point in the future. Each year the SS trustees estimate that date. For a few years, the estimate is that the fund will”run out” in 2035. At that point, benefits could only be paid out of new contributions being made by then-working employees. And, given the demographics, on an actuarial basis there wouldn’t be enough to pay the promised benefits in full.
And the current “news” revolves around the fact that with fewer people working and paying in –plus government suspension of employer’s contributions — that date will come sooner than expected.
BUT, the SS system is basically just a government promise, anyway! And you can be sure they will do something to either increase contributions, or adjust benefits for wealthier recipients, or print the money. Reducing SS benefits would trigger a political “revolution.” There are a lot more things to worry about than SS right now! But it is an incentive to keep saving and investing so you are not so dependent on your SS check when you retire.
