From Birch Gold Group
Social Security has become more uncertain in recent decades, primarily due to questions about its long-term feasibility.
MarketWatch says Social Security will run into a “wall” in 2034:
That’s when, say Social Security’s trustees, the program’s trust fund is scheduled to run out of money. If nothing else is done, they say, after 2034 Social Security’s annual income will only be enough to pay “about three-quarters of scheduled benefits.”
That would mean a 25% cut in potential Social Security payments over the time that a retiree would receive those benefits.
If your benefit would have paid $2,000 per month, a cut like this means $500 less every month ($6,000 annually) for their entire payment schedule.
But the same article touches on what could be an even more dire problem (emphasis ours):
According to Fed data, at most one quarter of people currently nearing retirement are going to be able to shrug off any cuts at all in Social Security. Actually, it’s probably considerably less than one quarter.
And everyone else will be in serious trouble. Half of those nearing retirement will end up in dire straits. That’s because most of them have little or nothing in private retirement plans.
Last October we reported on a Center for Retirement Research study that revealed 54% of middle-class Americans didn’t have enough saved for a decent retirement.
The Fed data MarketWatch examined also revealed that, on average, the bottom 25% income tier of people in their 50s only had $28,000 in retirement savings.
There’s no doubt that Social Security benefits come with some uncertainty, but the situation gets more dire when you start finding pieces of the puzzle you didn’t realize were there.
3 More Factors Contribute to a Shrinking Social Security Check
Social Security is under so much strain that its uncertainty alone should encourage anyone to consider a back-up plan.
But there are at least 3 additional factors to consider that can eat away at your monthly benefit payment.
1. Emergencies – If your car breaks down, you get a serious medical issue, or any other expensive, unexpected emergency, it can be disastrous for your budget. With normal expenses already taking up most of any American’s Social Security check, according to Motley Fool, putting aside money for emergencies is “difficult or impossible.”
2. Healthcare expenses – Since Medicare programs don’t cover everything, seniors are left with hefty annual medical expenses to account for.
According to the Bureau of Labor Statistics, mean healthcare spending is $5,994 annually among those aged 65 and over in 2016. However, seniors with high prescription drug needs could end up spending even more.
If you’re not prepared to spend $6,000 per year on healthcare, that Social Security check can only go so far.
3. COLA (Cost-of-Living Adjustment) – COLA is examined each year by the Social Security Administration. A positive adjustment isn’t always made (in 2016 it was 0%), but when one is, it typically doesn’t keep up with inflation. Medical inflation alone outpaced any COLA the SSA implemented in 33 of the last 35 years.
These three factors could make for a difficult retirement if you try to rely on your monthly benefit alone. And that doesn’t factor in any of the reasons why you might get a reduced benefit in the first place.
Instead of relying on just Social Security, consider forming a more complete retirement plan.
Diversify Your Retirement Basket
“Don’t put all your eggs in one basket”. Sounds like simple advice, but some people still “roll the dice” and try to win big with their retirement savings.
Unless you’re lucky, this is generally not the best idea.
Diversification can reduce your exposure to losses that can happen to investments affected by uncertain markets. With a Precious Metals IRA, you’re able to diversify by putting a portion of your savings into assets that are known for doing well during times of uncertainty such as physical gold and silver instead of a volatile stock market.
Just because Social Security is set to suffer, doesn’t mean your retirement plan has to as well.
After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.
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As Greenspan once famously said (paraphrased), “I can guarantee you the government can send the checks. What I can’t guarantee is what those checks will buy.” The problem is the coming inflation as the government ramps up the printing to meet all its obligations.
Gietner and Bernanke started the non-stop printing in 2008.
The gubmint advises you wait to 67 to get the full benefit. Ignore them. Take the money at 62. No matter what they suggest you do, always do the opposite. Get before it’s gone.
This is not quite true.
If you work before your full retirement age (this has been bumped up several times) there is a ceiling of how much you can earn – before SS penalizes you. For every $3 above the ceiling – they penalize your SS payment by $1. If you’re working and making more than poverty wages – it’s best to wait until your full retirement age.
What if you are working, but make less than the ceiling? (wife’s situation) What is your take on that?
Dutch is right. However if your wife stays below the ceiling her SS retirement benefits should be non taxable. Regardless, take it at 62. Had a guy I knew worked at CVS was hanging in to grab the larger amount. Massive HA took him at 65.
See DanielAmmerman.com and look for his take on SS.
I ran the numbers – you get the same amount of money whether 62 or 70. As long as you income is less than their metric.
However do you file a joint return? It may have an impact.
I asked the financial guys at a free chicken dinner event what is the percentage of people that wait until they are 70 years to collect and die before they receive what they could have had they taken between 62 and 70. They replied that they have never seen any published government statistics on that. The government has the data they just don’t release it. They want you to file later than 62. My boss died after collecting one retirement check. I will be inclined to collect sooner than later.
By taking it at 62 you’ll do better until you’re 81. That’s the cross over point. Plus waiting allows increases in your Medicare payments. Take SS early and your Medicare payments percentage gets locked in-wait and you’ll pay more for Medicare negating waiting.
Again Daniel Ammerman.com has some great stuff on SS.
Thanks for the link Steve, I will look him up.
“Medicare payments percentage”
What payments are you referring to? Part B premium payment? Payout for claims? Or something else?
I am unaware of any lock-in provision. Please clarify.
Thanks
We looked into it… actually, if you can take it at 62, bank the money at even tiny interest, then hand it all back when you are 65 (or older) you can get the full monthly amount from then on…
But, for Nick, it was 500 bucks a month, so when he’s 65, perhaps we will see if there are any goose eggs full of fiat around to exchange for a bigger monthly stipend. Haha…
We have never been the types to let go of a bird in hand.
Agree, and the money one gets in the future may be more but what buying power does it have compared to earlier.
We decided to take the early payout and stack some of the four B’s. (Don’t forget your Bible.)
Smart move.
I believe the “hand it all back” provision ended in 2015 along with the cancellation of other favorable rules such as file and suspend.
Financial guys at free chicken dinners know just enough to be dangerous. Do your own homework; it can be tedious and at times confusing, but there is good information out there. There is a guy from Boston who runs a PBS series and a Q/A column-he presents a lot of real life examples. He has an interesting twist from Larry: treat your SSA benefit not as a retirement benefit but as longevity insurance.
Be sure to study the stuff SSA puts out, especially if you have a corner case and need all the help you can get. The people in your local office are of most help when you educate yourself and use their language (lots of confusing terms and acronyms); they often do not listen well or understand what you are trying to say, so, again, understand and use their words, phrases, and language.
SSA has all kinds of statistics, trust me. Per SSA, something like 3% of age 66FRA beneficiaries postpone claiming until age 70 (that is an 8% bump per year-better than robbing liquor stores). I am sure they also have data on death rates vs claiming age.
Fun Fact: I often wondered WTF is the “death” benefit still only $255? SSA has a paper on the history of that benefit, chronicled all the way back to its origin in the late 1930’s. It even made some sense. Congress dicked around with the amount and other details over time but it is largely the same as when created.
An example of Larry’s column:
https://www.pbs.org/newshour/economy/column-ignore-this-piece-of-advice-from-social-security-to-get-maximum-coverage
Thanks for the info MS. Also the government hasn’t adjusted the income levels that people are taxed on their SS money since I think 1984 as it would cost them revenue.
And if you wait, your Medicare premiums still go up while you’re waiting which nullifies waiting.
Medicare premiums are adjusted annually, if at all. Most everyone pays the same for Part B (though there are exceptions). Claiming SS early does NOT protect one from rising Part B premiums.
Recently there were 2 years with zero COLA and the “Hold Harmless” provision for Part B kicked in. There were 2 groups that were affected; 1 was huge and the other small (headcount, that is). The huge group seemed to be getting off easy with their artificially low Part B premium; the small group-with the “unfairly” high Part B premium-felt they were getting screwed. In truth, both the SSA and CMS use actuarially fair methodologies to achieve fairness to entitlement holders (that means you and me).
Like all in life, make sure you know the rules before you play the game.
ZZ, it depends on several variables. Your health, your nest egg, your risk tolerance among others. For us the recently shit canned “file and suspend” option gave us a very attractive alternative. That maximized the survivor benefit for the little woman and also maximized the monthly payout for me since I postponed to the max.
If a person has one foot in the grave at age 62 then that is a no brainer: take it while you can.
In between cases take some soul searching. I like to blame the gooberment too, but in the case of SS I have made an educated guess of what I saw ahead. Ignorance is no excuse-the information is there, all you have to do is understand it all.
Fun Fact: None other than WJ Clinton created the file and suspend option as a way of rewarding working women for their retirement “disadvantages”; Barry Soetoro killed it in 2015. So much for looking out for the little people.
Word to the wise: only when you fully understand the term “actuarially fair” should you execute your claiming strategy.
My mom worked until she was 75 making pretty good money. She started collecting a late as possible. She had it all auto-deposited and never touched a penny, and when Alzheimer’s set in (around the age of 73-74 we think), she even forgot that she was receiving checks. She died at 84. I am happy to put all of that money into my retirement account for my wife and I.
Unless you have someone special to leave it all to, get it while you can and while you can still do something useful with it.
Your mom probably was a couple years beyond break even (often 81-83 years old, depending on other factors). I think ladies are more risk averse, especially if single or widowed, and are okay with letting it accumulate if they don’t need it to live on.
A favorite line among some retirement planners is to arrange to spend your last dollar on the day you die.
Understand “actuarially fair” as it applies to one’s situation before making any kind of decision.
Yesterday, I suggested people look up this analysis. I spelled his name wrong. So, here is his 4 part analysis on when to take SS.
http://danielamerman.com/va/BenefitAge.html
Took mine at 66. Didn’t need it so I stacked it in silver and gold until 20% of my net worth. Now it’s going into an s account for a rental house to be bought for cash. I still work full time so the benefit goes up every year. Yes Llpoh I got all my money back and now I’m collecting the interest. So keep sending those payroll taxes in, and I’ll keep scooping them up!
Robert (QSLV)
The COLAS will keep coming, the checks will keep coming, everyone will pretend everything is fine and that every politician is keeping their promises to leave SS alone. Meanwhile, a loaf of bread will be $20, a dozen eggs will be $30, and that check that keeps coming will barely buy a week’s worth of food.
I remember my mom sending me to the store for a loaf of bread in 1968. My dad became unhinged when he found I spent 22 cents for it. Of course he preferred day old bread for a nickel a loaf or less than that even.
when you went to the store w/a dollar bill for bread,did you ever buy a pack of baseball cards & then try to slip the change onto dad’s dresser w/the other change so mom wouldn’t know what you did?
As the Russian worker says about Communism: we pretend to work and they pretend to pay us. All is good.
And the property taxes, gas, food, water, home and car insurance and repairs..keep rising, and rising…..we can live down to our SS income but it take real strict planning.
A COLA that goes up about $30.00 every 3 to 5 years or more (last increase before the recent one was just before Bush Jr. left office) and never helps when property taxes, gas, food, water, home and car insurance and repairs…keep rising much higher than that.
So far Medicare has risen and S.S. rises just enough to pay for the increase in Medicare…so it evens out to pretty much 0, zip, NADA!
But, but…..Sandy O. now has a $170K salary to help with her apartment rent.
Take it from me, it’s NOT enough to live on. We need to remove the income cap and increase the benefits by 50% to reflect reality.
Oh…wait..hold everything!!!! We have to go to the “moon” first. Yeah, that’s the ticket. Let’s pay those “Trump trillions” he wants to spend to go into space once again to the “moon.”
The big corrupt Blue State defined benefit unlimited increases for life retirement plans are going to go pfffffft very soon as they are unsustainable near term let alone decades into the future.
Progfuk commieass filth Democrats running those states will be attempting to confiscate part of private retirement funds to make up their shortfall placing the citizens they want to rob at risk. Then of course the bighearted Progfuk commieass filth Democrats will in addition proclaim it is only “fair” to let the state retirees be given social security to make up for the shortfalls in the Progfuk commieass filth Democrat run states that stole the pension money in the first place.
If you tried to provide for yourself you will be robbed and if you simply believed the government you will be robbed by the diminished payouts due to Progfuk commieass filth Democrats stealing from you to pay the hacks and cronies whose retirement funds they stole.
In a nutshell, Progfuk commieass filth Democrats at the end of the day will have stolen part or all of everyone’s retirement money. One may be much better off with a safe full of twenty dollar bills and no accounts of any kind anywhere. Like Annie says, “it isn’t yours unless you can stand in front of it with an AR-15.” Get one of those too.
HISTORY ALWAYS REPEATS ITSELF AND ESCALATES. Few care to remember history and learn from it. Especially from the people who were the true grit and resourcefulness of past generations.
This very soon coming planned financial fiasco (also warned of in the Bible!) is NOT about gold, investing in the stock market, or diversifying your money, or IRA’s – that will ALL BE GONE. Most any retirement account is being pillaged already. “Social Security” will one day be a thing of the past. It’s now all about “digital,” “technology.” But how fragile is the “grid?”
Learning and wisdom from people who lived through the Great Depression, how they managed their food, and grew their gardens, made simple meals with what little they had, and they helped each other. And survived! We can’t eat gold or silver, or the paper the company stocks are written on. Stores are closing right and left as we speak. The dollar is pretty much obsolete and will very soon be worth more as toilet paper.
The “talking the market up” political rhetoric and stock chart today is the same as before the financial crash of the Great Depression of the late 20’s and 30’s. Look it up – –
https://www3.nd.edu/~jstiver/FIN462/US%20Market%20Crashes.pdf
https://www.marketwatch.com/story/scary-1929-market-chart-gains-traction-2014-02-11
The most insightful books I’ve read and highly recommend are “Stories and Recipes From The Great Depression of the 1930’s” written by Rita Van Amber. These are real stories from the people who lived through that very hard time and how they made do with what little they had and were very resourceful. Something that is greatly missing today.
Are we really coming back??…NOTHING COULD BE FARTHER FROM THE TRUTH! It’s all psychological mumbo-jumbo. Same as then. History always repeats itself. Always. These books contain great wisdom from people who lived through very hard times. This is not an advertisement – just simply a recommendation.
https://www.amazon.com/s?k=Stories+and+Recipes+from+the+Great+Depression+by+Rita+Van+Amber&ref=nb_sb_noss
I grabbed the pittance when I hit 62. I needed to pay a few bills. Only reason I grabbed it at all was because Medicare. No one can afford ‘modern medical care’ these days and Medicare has saved my bacon on several surprise occasions.
If you are single the path ahead (as far as SS strategy goes) is simple. If you have a spouse (or a former spouse) there are provisions that may help you increase your benefit. If you have several former spouses with adopted children plus a couple of disabled Nigerian adopted children you may be able to cash in nicely.
The rules are full of corner cases that are often hidden and hard to understand. For example, (if memory serves me accurately) if you are a widow claiming survivor’s benefits and you are about to get re-married, do NOT do so until at least one day after your 60th birthday.
The simplest situation for SS is a person who has enough credits to claim, has never been married, has no dependents of any kind.
Even the simplest adders (keep working, have a spouse) add complexity.
Ask questions, be armed with knowledge, and be wary of what SSA people at the local office tell you-sometimes they are right and sometimes they are wrong.