12 IMPORTANT THINGS TO KNOW ABOUT SOCIAL SECURITY

social-security

  1. SOCIAL SECURITY IS NOT GOING BANKRUPT

Social Security trust funds are near an all-time high.  The Trust Fund Reserves are worth about $2.89 trillion today.  As more boomers retire, the ratio of workers to Social Security recipients is changing.  The program will need to dip into its reserves to pay full benefits from now on.  It is now forecast that the trust fund reserves could be exhausted in 2034.  Social Security still won’t be bankrupt.  The program will then pay benefits at a rate of 79 percent of what recipients expected to receive.  The goal is to keep benefits at their current level.

  1. CONGRESS PROBABLY WILL NOT TAKE UP SOCIAL SECURITY REFORM ANYTIME SOON

Control of Congress after the 2018 elections will play a key role in how Social Security’s funding is addressed.  Since Social Security is so important, we need to be really thoughtful and deliberate about how to make a change.  Bipartisan support will be required for Congress to make any effort to reform Social Security.

  1. SOME IDEAS TO REFORM FUNDING ARE STARTING UP

One proposal is to either raise or eliminate the wage cap on how much income is subject to the Social Security payroll tax.  The cap for 2019 is $132,900.  Other options are either raising the percentage rate of the payroll tax or raising the age for full retirement benefits.

  1. LAWMAKERS DO NOT RAID THE TRUST FUND

Money remaining after benefits are paid is invested directly into U.S. Treasury securities.  The government can use the money from those securities, but it has to pay the money back with interest.

  1. MANY BELIEVE IT CAN BE RUN BETTER

With the rapid increase in the number of retirees, the agency is struggling to keep up. Over 10,000 people are turning 65 every day.  Average wait times at field offices has increased by 32% since 2010.  Something needs to be done.

  1. YOUR SOCIAL SECURITY BENEFITS CAN BE TAXED

Single filers whose combined annual income exceeds $34,000 might pay income tax on up to 85% of their Social Security benefits; couples filing jointly may pay tax on up to 85% if their combined income tops $44,000.

  1. SOCIAL SECURITY IS NOT MEANT TO BE A RETIREE’S SOLE SOURCE OF INCOME

The SSA says the program’s retirement benefits will replace about 40 percent of your preretirement wages.  Fifty percent say their families depend on Social Security for at least half of their income.  Twenty-six percent have families trying to live on almost all of their retirement income.

  1. THE PURCHASING POWER OF SOCIAL SECURITY IS DIMINISHING

Every year, the SSA issues a cost of living adjustment (COLA) to keep up with inflation.  Medical costs for older Americans has increased faster than the COLA has adjusted.  This is another area that needs to be addressed.

  1. YOU CAN WORK AND GET SOCIAL SECURITY

The agency will withhold some of your benefits if you are under the full retirement age and your earned wages exceed a certain limit.  In 2019, the threshold on your earnings will be $17,640.  The government will temporarily withhold $1 from your benefit for every $2 earned over the cap.  Once you reach full retirement age, you can work as much as you like and your benefits won’t be reduced.

  1. SOCIAL SECURITY HAS GONE DIGITAL

The U.S. Treasury Department no longer sends paper checks in favor of electronic payments.  The SSA has an online portal called My Social Security where you can track your benefits.

  1. SOCIAL SECURITY IS NOT JUST A RETIREMENT PROGRAM

There are 4 main types of Social Security benefits:  retirement, disability, dependent and survivor.  When filing for benefits, you should make sure to ask about your eligibility for other benefits.  If someone in your family dies, you should inform SSA of the death and ask if you or other family members are now eligible for an additional survivor or dependent benefits.

  1. MOST PEOPLE GET BACK MORE THAN THEY PUT IN

Generally, married couples are more likely to get back more than they contributed than single people.  Both low-income and high-income people may receive more dollars from the program over a lifetime than the amount of money they contributed to it.