The Social Security Trust Funds are going down, which could be bad for people who are already getting benefits and people who will get benefits in the future.
Social Security gets its money from two places: taxes paid by workers and money from Old-Age and Survivors Insurance (OASI). The OASI fund makes up the difference because payroll taxes alone can not pay for the program’s benefits.
But this fund has a date when it runs out. The Social Security Administration says that the fund will run out of money by 2033, which is less than ten years from now.
If you add in the Disability Insurance (DI) Trust Fund, which is also in charge of benefits, the deadline is pushed back to 2035.
It is not the first time that the program has been in trouble and needed help from Congress to keep running, but the deadline for the cuts is coming up quickly and there is no way out in sight.
This is bad news for people who depend on the program or plan to in the future, because more and more Americans could lose their jobs and become poor without this money.
Future retirees should not wait for lawmakers to solve the problem. Instead, they should make plans now to make sure they have as much independence from public finances as possible when they retire.
How to Prepare If You’re Still Working
The benefit is big and should not be taken lightly for people who are still working and do not depend on a fixed income.
If you know you have a few years to get ready, you might change your budget and set aside more money for savings to make up the difference between how much you planned to spend and how much you actually need to spend.
These goals led the Internal Revenue Service (IRS) to create catch-up contributions, which let workers over 50 increase the amount of money they can save in their 401(k) or IRA accounts.
Putting your money into safe portfolios and saving more will help you have a safe and enjoyable retirement.
If you are still working, you will be able to look over your plans for retirement. If, say, you had planned to retire at age 62, but your finances do not allow it, you can change your mind and wait a little longer.
Even though the oldest age to get Social Security benefits is 62, most families can not live on that much money, especially when medical costs are added in. That is why waiting until Medicare benefits start may be a good idea.
What to do if you’ve already retired and rely on Social Security?
Even though retirees do not have as many choices, that does not mean they can not get better. One easy way for retired people who are still able to work to make extra money is to join the gig economy.
This might help them save money in case they get hurt. They could save money for ten years if they began right away.
Moving to a different part of the country where Social Security payments are higher is another option. It can be hard to leave family and friends behind, but people who live in expensive areas will be amazed at how different their lives become.
The best thing for retirees to do is to think about their choices, make sure their budget is balanced, and look at their money carefully. This information will help them figure out what they need to do to make sure that the cuts to their benefits do not hurt them.
