mean extending full retirement agefrom the current 67 for people born in1960 and later.
Any other alternatives?
We could increase the income cap forhigher income people and provide benefits for that. I think that with a combination of [most of] those changes, wecould meet promised benefits.
Suppose a pre-retiree finds they have amuch shorter life expectancy due to anillness and are likely to live only a yearmore. Is there a strategy for them tostart claiming benefits earlier?
Yes. They could file for up to six monthsof retroactive benefits, as long as itdoesn’t take them back to before theirfull retirement age [FRA]. For example,if someone has an FRA of 66 and sixmonths, they could file in July for benefits as if they began taking them fromJanuary and thus receive six months ofbenefits retroactively.
What’s another example?
Consider a single woman who loses herjob this year because of the coronaviruspandemic. She needs income. What canshe do? If she’s 68, and thus six monthsbeyond her FRA, she could file for sixmonths of retroactive benefits at the67-and-six-months benefit level. Thatway, she would receive six months ofbenefits in one lump-sum payment.
Any downside to that?
Her Social Security benefit level will bepermanently lower than it would havebeen had she not filed for retroactivebenefits. So it’s a trade-off: She’ll get sixmonths of benefits today, but the benefitsfor the rest of her life will be lower — andthe cost of living will be higher.
Jane Wollman Rusoff is a contributing editorwho specializes in interviews with thoughtleaders. An author and prolific journalist, Janeis founder of www.FamilyStarProductions.com.
Social Security on Track to Go Bust in 2035
The Social Security trust funds are still on track to be depleted in 2035, the sameas projected last year, with 76% of benefits payable at that time, according to thejust-released Social Security Board of Trustees’ report.
The Federal Disability Insurance Trust Fund, meanwhile, is projected to bedepleted in 2065, which is 13 years longer than last year’s estimate of depletion in2052; 92% of benefits would still be payable.
The 2020 numbers do not account for the effects of the COVID- 19 pandemic.“Given the uncertainty associated with these impacts, the Trustees believe thatit is not possible to adjust their estimates accurately at this time,” according to asummary of the report.
But while the program is not going “bankrupt” or becoming “insolvent,” SocialSecurity’s “long-term fiscal health cannot be guaranteed if the White House andCongress continue to use the program’s financing structure for economic stimulusduring the COVID- 19 crisis,” said Max Richtman, president and CEO of the NationalCommittee to Preserve Social Security and Medicare, in a Wednesday statement.
A broad-based payroll tax cut, as President Donald Trump has proposed,“would interfere with Social Security’s traditional revenue stream while failing todeliver effective or equitable stimulus. Meanwhile, Social Security already provides more than $1.6 trillion in annual economic stimulus as seniors spend theirbenefits for essential goods and services in their communities,” Richtman said.
“ Now is not the time — in fact, it is never the time — to tamper with a program
that more than 40% of retirees rely upon for all of their income.”
Trump tweeted recently that payroll tax cuts would be considered for the next
Another factor not accounted for in the trustees’ report: More than 22 millionpeople have filed for jobless benefits since mid-March. But “it seems unlikely thata temporary uptick in unemployment would have a significant affect on SocialSecurity’s projected revenue over the long term,” Webster Phillips, senior legislative representative for the National Committee to Preserve Social Security andMedicare, said in an email message.
Linda Benesch, spokeswoman for Social Security Works, said in a Wednesdayemail to ThinkAdvisor that Social Security currently has a $2.9 trillion surplus.
However, “if Congress takes no action between now and 2035, that surplus willbe gradually drawn down. … Even after 2035 Social Security will still be able to payaround 80% of benefits because most of its funding comes from workers’ payrollcontributions. Congress should take action, including raising the cap on payroll contributions, so that Social Security can continue to pay 100% of benefits after 2035.”
Nancy Altman, president of Social Security Works and the chair of the Strengthen
Social Security Coalition, stated that “though the exact impact of today’s pandemic and
economic conditions will not be clear until next year’s report, Social Security’s strength
will shine through next year, as well. Social Security is built to withstand today’s events.”
Atlman just noted in Forbes that “Trump continues to demand that Congress enactan elimination of payroll contributions, which are Social Security’s dedicated funding.
“As a response to the coronavirus crisis, this makes no sense. It’s slow, inefficientand fails to get money into the pockets of those who need it most. The only reasonto support this policy over better targeted, more efficient measures is if your truegoal is to undermine Social Security and its self-funded status.” —Melanie Waddell