Daily Money - The Truth About Social Security

October 19, 2021

Every year, the Social Security trustees release a report about the program’s health, and the media dutifully reports the bad news. But the outlook isn’t quite as bleak as the headlines suggest, and believing the worst can have serious consequences for your retirement security. Some recent headlines focused on the fact that Social Security would become insolvent by 2033. That’s when the program’s trust fund is projected to run out of money. Yet after that, payroll taxes will be sufficient to pay an estimated 76% of promised benefits. And if Congress acts to shore up the program before then, as many expect, then benefits might not dip at all. Bottom line: Social Security is not going away. People who believe it is may rush to claim at age 62, to get what they can before the money dries up. If you claim at your earliest eligibility, you lock in a lifetime of lower benefits than if you wait until your full retirement age or, if you can hold out that long, until age 70. Learn more about how negative headlines can affect Social Security claiming decisions in today’s edition.

Best wishes,
 
 
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Timely Retirement News, Insights and Advice

Don’t rush to claim because you think the program is going bankrupt.

Here’s what to know about 2022 coverage.

Unlike first-time buyers, they can leverage their existing equity.

Retire With Money Community News

What are you up to these days?

We love to travel the country with our Airstream. We both love the water and spend time boating and fishing together. Lynn is a quilter and very much enjoys shopping for fabric and making quilts for family and friends. I enjoy building wood projects for home and grandkids. We also love spending time with our three grown children and six grandchildren.
 
Nice! What's your saving/ investing philosophy?

As I progressed through my work life, I advanced in position and salary. We tried to save 60% of my salary the last five years I worked. I also planned early on to retire early. On top of always maxing out my 401(k) contributions, I was able to take advantage of a deferred income program which was earmarked for private health care costs until we are both 65. Our philosophy for saving early on was buckets for vacation, for holiday gifts, for mortgage and so on. Our philosophy for investing hasn’t changed over the years, but we now live off our investments until we reach FRA [full retirement age for Social Security purposes], so we diversify and don't overreact to market fluctuations. We diversify by owning all kinds of investments: equities, mostly federal tax-free municipal bond funds, corporate bonds and real estate. Always have a safe emergency fund and a good amount of CDs (this helps us sleep well every night). We are both conservative investors and money has never been the most stressful part of our life.
 
Tell us something (or someone) that you're grateful for.

We are both grateful to our parents for being a great example. My father passed away when I was very young and my mom was very frugal as you might expect. She was able to still save money for us to use for our first house as a down payment, and this set us on a great path. Lynn’s father was a very big influence on both of us. He worked hard, but never made a lot of money. He was still able to pay for each of his children's college, two daughters’ weddings and held some of our mortgage debt as we were getting our feet under us. He taught us about debt and how it can change your life if you manage it correctly.
 
Teach your children about money and relationships, by setting a great example for them to follow. Bad debt is bad, good debt is good, but no debt is best. Always hold hands in front of them!

Retirement News From Around The Web

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Elizabeth O'Brien is deputy editor at Money. She has covered retirement and health care for nearly a decade. A Brooklyn resident and mom of two boys, she navigates the alphabet soup of Medicare and the New York City subway system with equal ease. You can email her at elizabeth.obrien@money.com and follow her on Twitter at @elizobrien.

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