The nature of Social Security is that our benefits mature as we do. They become worth more the later in life we claim them. The easiest way to significantly boost your benefits is to wait to file until after your full retirement age.
However, not everyone can afford to wait that long and need to claim their benefits before they have originally planned. As the threat of insolvency continues, benefits face the risk of receiving a 20 percent cut across the board. Benefit calculators, which are intended to be used to calculate how high your benefit can be, are now being used to determine how a potential benefit cut may affect the average senior, CNBC’s Lorie Konish reports.
Potential Benefit Cut
The Social Security Trust is facing insolvency. While certain aspects of the program have proper funding, others will run out of money within the next few years. If the trust was allowed to become insolvent, Social Security would still exist — but seniors would only receive an approximate 80 percent of their monthly benefits. Millions of Americans rely heavily on Social Security as their main form of retirement income and a 20 percent cut would mean a substantial loss in income.
Retirement calculators are common tools that look at your assets, your income, your debt, and external factors like inflation and interest rates, to determine what you would need to comfortably retire. Social Security benefit calculators’ factor in your age, and your earnings. The actual benefits are based on 35 of your highest earning years and is generally supposed to reflect 40 percent of your established income.
The easiest way to know what a potential benefit cut will look like is to subtract 20 percent from your current benefit and compare it to your cost of living. If you find that it significantly affects your financial situation, it makes sense to take preemptive action should insolvency occur. Use a calculator to see your benefits’ future and the need to start relying on other sources of retirement income.
For more Social Security updates make sure to stay up-to-date with the lasts post from the Council for Retirement Security. Join the Council’s fight to protect the Trust from insolvency today.