Does COVID threaten your social security benefits?
Social security is a program that you can pay into your entire working life. The prospect that this valuable source of income for retirement will no longer exist after leaving the job market is alarming to many Americans. As it stands now, it is not a question of “whether social security will run out of money”, but when. As the end of the COVID economy begins, you might be wondering if the coronavirus will accelerate the decline of social security?
According to the most recent eighth annual consumer survey on social security From Nationwide, 71% of Americans fear Social Security will run out of money in their lifetime. At the same time, 19% of respondents said the coronavirus pandemic would likely change if they chose to get social security benefits. I’m going to get on my nerves and guess that some of the 29% of people (apparently) who don’t worry about Social Security running out of money fall into one or more of the following categories:
1) Have a different state pension (think congressmen and senators)
2) Are so rich it doesn’t matter (think of multimillionaires and billionaires)
3) You have already started social benefits.
While the boom in real estate transactions and soaring stock markets have been reasons for optimism, the coronavirus has led to a more pessimistic outlook on things like social security. According to the survey, 59% of Americans are more concerned about their Social Security running out of money today than they were before the pandemic.
Interestingly, more people plan to apply for social security later (11%) than before (9%). Waiting for the social security application will increase your monthly benefits. This delay can also help increase your financial security later in life.
Annually, the social security trustees prepare a report on the expected long-term solvency of the social security program. The report has not yet been released in 2021, after the darkest days of the Covid pandemic. (I am optimistic that the worst days of the pandemic are behind us, at least in the vaccinated parts of America). So you know that the 2020 Social Security Report estimates that the combined reserves of the various social security programs (Pension, Survivor and Disability) would be depleted in 2035 if no changes were made to tax benefits.
The pandemic was a wake-up call for many Americans to reassess their finances and retirement plans, including how social security fits into those plans. More than two thirds of those questioned in the nationwide survey stated that it is more important than ever today optimize their social security benefits.
It appears that the financial advisory community is not adequately advising its clients on the best strategies for making social security claims. As a fiduciary financial planner, I believe the Social Security Guide should be a part of any retirement plan. The majority of Nationwide respondents said they did not get advice from their financial experts. (Shame on you). In addition, two-thirds of respondents said they would likely switch from their current financial advisor to another financial professional who could help them make the right decisions about social security claims.
The Golden Girls may have gotten by on a steady income, but you will likely have a hard time keeping it … [+]
Can you live on social security alone?
Social security does not replace anything near your early retirement income. Most Americans will find it difficult to make a living on just social security. If you are amazingly thrifty and have paid off your mortgage, then you may be able to do so. The average social security check is only $ 1,543 per month in 2021. To be fair, a couple each receiving this amount could be fine in many parts of the country if they are both alive and receiving social security benefits as a result.
Maximum social security
The The maximum Social Security check in 2021 is $ 3,895provided you are receiving benefits at the age of 70. While this corresponds to a reasonable retirement income, it is far from a substitute for the income required to receive the maximum social security benefit. They would have needed around $ 140,000 (or more) in current salary to get the maximum benefit from Social Security.
Do your finances a favor and develop a plan for when to apply for welfare. Work with your financial advisor to determine the best time to get services. If they can’t provide you with the advice you need, it may be time to step up to become a financial planner who can help you maximize your social security benefits.