What To Do If Your Social Security Payment Drops 24%?
The Social Security trust fund is heading toward a shortfall that could slash monthly checks for millions of retirees, and the window to protect yourself is narrower than most people realize.
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Social Security will “run out of money” in 2032, according to the Social Security Administration’s annual Trustees Report. It won’t really run out of money. Benefits, however, will drop by about 24% to keep the funds solvent (this will vary somewhat state to state). One analysis shows that across the country, the drop will be about $550 per recipient per month. To some extent, that will vary by how much people paid in and whether they take their benefits early. And that depends on whether people elect to take their payments at 62 years old, 65/66 years old (known as “full retirement age”), or age 70.
How much people are affected is determined by what percentage Social Security is of their entire retirement income after the payments begin. “Without Social Security, 23.5 million more adults and children in the United States (including Puerto Rico) would be below the poverty line according to the Center on Budget and Policy Priorities (CBPP).
For people who lose $550 a month and rely on Social Security for a large amount of their income, taking action is critical. Most of the suggestions come from what you can do before you actually retire.
First among the suggestions is to take Social Security at age 70, which will boost the monthly payout. After “full retirement,” those who wait get a bump of as much as 8% per year.
Another suggestion is to save money as early as possible before taking the benefits. And, for defensive purposes, diversify these investments as much as possible.
Yet another option is other government programs. People qualify for these across a large number of reasons. These can include (SNAP, MSPs, LIHEAP, Extra Help). People should investigate whether they might qualify as early as possible.
Another thing people should track is whether the cut will drop their payments by 24%. Congress may “solve” the problem, but it may not solve the issue entirely.
The really bad news for people already being paid is that the drop doesn’t have an offset.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
