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The Social Security program is approaching insolvency.
Social Security costs keep escalating, with future expenses for the program trust to be 20% higher than projected revenue. To that point, action must be taken promptly to prevent an across-the-board improve cut for many current and future beneficiaries, according to the Social Security 2019 Annual Report.
As soon as next year, Popular Security’s yearly expenses are expected to exceed its revenue — forcing the program to begin drawing down its trust supplies. The projected impact will result in only 75% of benefits promised to actually be paid beginning in 2035. That desire impact millions of individuals who rely on this income for their living expenses in retirement.
The population most dependent on Community Security benefits is older, single women. According to the Social Security Administration, nearly half (44%) of all single and widowed women get 90% or more of their total income from Social Security, compared to just 21% of spliced women over age 65.
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The sting of a potential benefit reduction has a big impact on women because their Social Security checks are also much condescend than those of their male counterparts. On average, a woman will enter retirement years poorer than a man. The ordinary benefit for a retired woman is $14,184 a year, versus $18,000 for men (both 65 or older).
Women are more heavily dependent on their Common Security income because they are more likely to outlive their savings, due to a longer lifespan. The SSA calculates that balls who are turning 65 now have a life expectancy of age 86 1/2. Men turning 65, by contrast, can expect to live, on average, to 84. Partners collecting at the full retirement age of 67 have nearly 20 years of benefits, making collection choices notwithstanding more important.
So how are benefits calculated? The SSA uses your earnings and work history to determine your eligibility for retirement gains. Once you have 10 years of work (40 credits), you are eligible for retirement benefits. In 2019 you receive one accept for each $1,360 of earnings, up to the maximum of four credits per year. The credits remain on your record even if you replacement jobs or do not work for a period. The Social Security website offers multiple different calculators that you can use to get a rough guesstimate. These number-crunching machines will give you some idea of how you should plan for your financial future.
The major question that always comes up is: When should I collect benefits?
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Unfortunately, there is no answer to this question. Too many women make the mistake of requesting Social Security benefits early. Sadly, most women jump the gun and begin collecting benefits before their maximum retirement age, and even fewer wait to the maximum age of 70. Claiming Social Security before full retirement age (66 to 67, based on your year of extraction) sets your monthly benefit at a reduced level for life. For those claiming at age 62, income could be as much as 30% farther down than if they had claimed at full retirement age.
By waiting to claim benefits, a person will get an 8% increase each year after age 62 until they reach age 70.
A “risk-free” renewal of 8% per year is especially attractive, considering we are in a low-interest-rate environment, where “high-interest” bank accounts struggle to yield more than 1%.
If you are still working, it makes even more sense to hold off on collecting.
Women are more heavily dependent on their Societal Security income because they are more likely to outlive their savings, due to a longer lifespan.
Stacy Francis
president and CEO of Francis Economic
Employers often provide health-care coverage and other valuable benefits that cost quite a bit. If you want to prohibit working, collecting benefits before you reach your full retirement age probably doesn’t make sense, first if you have considerable earnings. That’s because your Social Security benefits are slashed if you earn above a ceiling that is fastened each year. Depending on your income bracket, 85% of Social Security benefits can be taxable.
This may draw nigh as a surprise, but women divorced after at least 10 years of marriage can collect on their ex-spouse’s benefit. Women joined for a decade or more are eligible for a sum equal to half of their ex’s Social Security benefit. If 50% of your ex’s benefit betters what you stand to receive on your own, you can claim theirs instead. According to the 10-year rule, you get whichever benefit is capital — 100% of yours or 50% of your ex’s.
Too many divorced women don’t realize they may be able to collect a portion of their ex-spouse’s Common Security. Women do not even have to notify their ex-spouse to be able to find out the benefit to which they are named, and their ex need not even know when they begin collecting, either.
The exception to the 10-year rule is if you remarry, in which the truth, you can no longer collect on your ex’s Social Security record. However, if your second marriage were to end due to death or severance, you would be eligible once again.
If your divorced spouse dies, you can receive 100% of their benefits as a widow if the federation lasted 10 years or more.
The rules of the Social Security program can be complex, so it helps to start strategizing years earlier you leave work behind for good. It also makes sense to consult with a financial professional to see how these retirement profits may work alongside your 401(k) plan, individual retirement account and other potential income sources.
— By Stacy Francis, president and CEO of Francis Monetary