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Two-thirds of adults approaching retirement age say they are worried that social security benefits are running out, according to a Nationwide Retirement Institute survey, and 61% say they must continue to work because their benefits alone have won. enough to go to retirement.

If your savings fall short, social security benefits can help bridge the gap between what you have saved and what you need to cover all your expenses. But the social security program may face cuts in the future, which means you may not get as much as you had planned – making it more difficult to plan for retirement.

Future of social security

It is true that the program faces some financial difficulties. Just as much money is pouring into the system in the form of tax as it comes out in terms of benefits.

Since the program started, the Social Security Administration has collected $ 21.9 trillion in social security tax and paid $ 19 trillion In terms of benefits, leaving $ 2.9 trillion in reserves, because the program is expected to pay more in the benefits than it brings in taxes, it is dipping into these reserves to avoid cutting benefits, but these reserves are expected to go dry 2035, and SSA estimates tax will only be enough to cover around 75% of expected benefits, in other words, the benefits can be cut by up to 25% if the problem is not resolved by 2035.

To avoid a 25% reduction In the benefits, wage taxes could be increased by about 4%, according to SSA. While no one wants to pay more in taxes than they have to, most will not see their social security slashed either. It is up to the congress to come up with a solution by 2035.

If you do not want to leave your financial future in the hands of the government, it is a good idea to start preparing now for the possibility of receiving less than You had hoped for benefits. The good news is that the system will not collapse completely; As long as employees continue to pay their taxes, there will always be at least some money that can be distributed as benefits. But to maximize those benefits in case of reductions, you need to be strategic when you begin to claim.

How to Maximize Your Benefits

An important factor determining how much you will receive each month is whether you claim before or after your full retirement age (FRA). If you were born in 1960 or later, FROM YOUR 67. For those who are born before that, FROM is either 66 or 66 and a few months.

The earliest you can claim benefits is 62 years, but if you choose to do so, you will receive less every month than if you were expecting – up to 30% less if FRA is 67. Wait for your FRA to claim And you will receive the total benefit you have the theoretical right to. If you wait until after the FRA has claimed, you will receive a bonus amount on top of the full amount. If the FRA is 67, you can receive 24% extra by waiting for 70 years to claim. While you can wait until after 70 years to claim, there are no financial benefits to doing so; bonus benefits max out at age 70, so you will not receive extra money to wait longer.

An advantage of waiting for 70 years to claim benefits is that it can essentially interrupt any possible cuts. There may be a 25% cut-off, but if you receive 24% extra each month by delaying benefits, those cuts will not stick that much. On the other hand, if you require 62 and get a 30% reduction, and your benefits are then reduced by another 25%, you won't be left with much.

Another way to protect and maximize the benefits is to increase the amount you are eligible to receive. Your full amount (or amount you will receive by claiming your FRA) is based on an average of the 35 highest working years you have spent. If you work a few years longer at the end of your career, the higher income years can replace some of your lower income years from earlier in your career, thus increasing your benefit amount. That amount can still be cut in the future, but if your benefits are higher at first, the cuts will not be so painful.

If you plan on relying on social security benefits for at least one Part of your retirement income, it pays to know how any potential cuts will affect how much you receive. By planning ahead to prepare for these cuts, you can maximize your benefits and ensure that your pension is as enjoyable and economically stable as possible.