Social Security Benefits to Drop by $300 – Expected Date Could Be Sooner Than You Think!

Future beneficiaries do not know whether current and future beneficiaries will have a Social Security Trust Fund to collect from or not. Social Security is primarily financed through payroll taxes and from Old-Age and Survivors Insurance (OASI) Trust Fund receipts, but current payroll taxes are insufficient to cover all benefits.

The OASI fund fills the gap, along with the Disability Insurance (DI) Trust Fund, and it could deplete by 2035 unless the problem is solved. Let’s look at how working people and retirees can plan for potential Social Security cuts.

Steps for Those Still Working

If you’re still earning a paycheck, you have a significant advantage: time. You’ve got some time to figure out how you can reduce your reliance on Social Security.

Increase Personal Savings

It is one of the best ways to protect your retirement by growing your personal savings. Think about switching some of your budget towards retirement accounts like a 401k or IRA. The IRS offers “catch-up contributions,” which increase the amount you can put into these accounts to help workers over 50 maximize their savings. Using these options, you’ll be able to create a bigger retirement cushion.

Invest Wisely

It is important to invest in a diversified, well-balanced portfolio. For retirement, you may want to diversify with a low-risk bond, a stable dividend stock, or a mutual fund. With a solid investment plan, you’ll have a reliable source of income in retirement with little to no reliance on Social Security.

Reevaluate Retirement Timing

If you were aiming to retire at 62, you might want to think about that again. Benefit receipt is limited to participants who meet minimal qualification requirements starting at 62 years of age, but benefit amounts are drastically reduced. You increase your monthly payment by waiting until at least full retirement age (67 for people born after 1960). Instead of waiting until 62, waiting until 70 will increase your benefits by 30% more than if you took them at 62. It also gives you a little bit of time to use your Social Security for living expenses because it will delay the Medicare benefits.

Options for Retirees

Retirees rely on Social Security and have fewer options to adjust before cuts, but they can still take action.

Supplement Your Income

If you are an able-bodied retiree, you might want to join the gig economy to earn extra income. Retirees can earn additional income by taking up freelancing, part-time work, or becoming gig economy workers. In many ways, these earnings are like savings for when Social Security benefits might be reduced.

Consider Relocation

If you live in a region where your dollar goes further than another, relocating could help you stretch your Social Security further. The idea of moving to a cheaper area for retirees living in high-cost areas is clearly a worthy one, and doing so can make such a serious cut in benefits less of an issue. But often, relocating is a huge thing and should be thought over in comparison with friends and family’s proximity.

Reassess Your Budget

If you can’t move, then a thorough review of your budget can help you cut costs. Cue essentials and look to see if there’s anyplace where you can reduce costs. If you evaluate your finances honestly, you can identify your own lag time between changes in your paying and protected income and then adjust to provide a buffer against any benefit reductions.

Conclusion

Social Security funds could run low in the future to the detriment not only of current retirees but future ones as well. Before the policymakers update in action, each group can do something active to bring financial freedom to themselves. Regardless of the future of Social Security benefits, preparation now will provide more security and peace of mind by helping you to maximize savings, delay retirement, join the gig economy, or reevaluate your budget.

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