Retirement planning is challenging enough as it is, but many workers worry that their later years may be threatened by Social Security Retirement Benefits’ ongoing financial difficulties.
It should be made clear that Social Security is not insolvent. However, the Social Security Administration (SSA) Board of Trustees’ most current projections show that its two trust funds would run out of money by 2034.
Planning For Social Security Retirement Benefits Reduction
In such a case, benefit funding for the SSA will have to come primarily from payroll taxes.
Furthermore, that income will only be adequate to meet about 80% of the anticipated payments.
In other words, benefits could be reduced by up to 20% if Congress doesn’t come up with a solution before 2034.
Your planning can be complicated if you anticipate retiring soon. Fortunately, you may take a few actions right once to lessen the effects of prospective benefit reductions.
The greatest approach to lessen your reliance on Social Security may be to increase your retirement fund savings.
Although it’s frequently easier said than done, investing even tiny amounts can have a big impact.
Consider the following scenario: You can afford to increase your savings by $300 each month, and the average yearly return on your investments is a respectable 7%. If you kept up that pace, you could have close to $50,000 in just ten years.
Read more: Anticipated 2.7% COLA For Social Security 2024
Securing Financial Stability Amidst Social Security Concerns
Since the average retiree receives $22,000 in Social Security benefits annually, an additional $50,000 in savings can cover more than two years’ worth of benefits.
The SSA will keep paying payments in full until 2034 while progressively depleting its trust reserves.
But before cuts become a reality, Congress will need to find a solution to the issue within the next ten years.
You can take precautions to safeguard yourself even though there is little you can do to stop future cuts.
Read more: What To Do If Your Social Security Number Is The Same To Others?