SOCIAL Security recipients could miss out on their full benefits even earlier than initially expected.
It comes as the Social Security Administration (SSA) navigates a financial crisis involving the money set aside for qualifying Americans.
Social Security is expected to have depleted funds a year earlier than before (stock image)[/caption]
The SSA’s cash comes primarily from two trust funds.
First is the Old-Age and Survivors Insurance (OASI) Trust Fund, which is responsible for the cash that pays out retirement and survivors benefits to eligible recipients.
There’s also the Disability Insurance (DI) Trust Fund, which as its name indicates, provides benefits to disabled persons and their families.
The SSA reported last year that both funds were in a dire situation, becoming so depleted by 2035 that, combined, 100% of benefits couldn’t be paid afterward to those Americans who qualify for them.
Except, new projections released on June 18 show that 100% of benefits can only be distributed in a combined capacity through 2034.
CHANGES NEEDED
That’s a full year earlier, meaning a potential 19% reduction in benefits would come sooner than expected, as noted by Myechia Minter-Jordan, CEO of AARP, in a statement to USA Today.
Minter-Jordan demanded immediate changes from Congress.
“Congress must act to protect and strengthen the Social Security that Americans have earned and paid into throughout their working lives,” she emphasized.
“More than 69 million Americans rely on Social Security today and as America’s population ages, the stability of this vital program only becomes more important.”
Individually, the OASI fund is in more of a predicament than the DI fund.
OASI is projected to pay complete scheduled benefits until 2033, as noted in the projections report.
For DI, it’s fully funded through at least 2099.
Total projected shortfall of retirement benefits alone is expected to be about $25.1 trillion through 2099.
Medicare is also expected to face depletions by 2033, three years earlier than expected, covering only 89% of scheduled benefits.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
“As in prior years, we found that Social Security and Medicare programs both continue to face significant financing issues,” trustees wrote in a summary.
Still, SSA commissioner Frank Bisignano has emphasized in a statement that the trust funds remain a “top priority for the Trump Administration.”
BE PROACTIVE
Either way, Americans can take at least two steps on their own to mitigate the potential depletion in benefits.
First, they could work longer or decide to take benefits later.
Financial experts have consistently advised that seniors wait as long as they possibly can to get the maximum amount of money possible from Social Security benefits.
Not only would the extra working years mean more cash saved, but it could lessen the blow from Social Security if full benefits aren’t available.
Secondly, in the time being before 2034, planning ahead and looking for jobs that pay more could put workers in a better position for retirement.
More money can then be set aside in a 401(k) or Roth IRA to be drawn out of later in life and make up for the Social Security gap.
Americans also recently saw Social Security checks hit an all-time high of $2,002, with millions to see even bigger COLA payments.
Some recipients are also at risk of losing $3,500 yearly in a new plan.
