Throughout the years, you have paid taxes into the Social Security system. And yet, you might often hear dire predictions about the solvency of the program, and you worry about your future benefits. As often as the Social Security program makes the news, most people don’t really know much about it. If you’re concerned about your retirement benefits, read on for answers to some of your most pressing questions.
Will the Social Security Administration go belly-up before I even retire? Many news stories focus on the Social Security fund “running out of money”, but this isn’t entirely accurate reporting. Yes, the surplus fund is running out of money, and there is a possibility of a budget shortfall beginning around 2035.
However, about two-thirds of Social Security benefits are paid from current taxes, not from this surplus fund. In our absolute worst-case scenario, your benefits will be reduce by about one third. But considering the number of angry voters that politicians will be forced to appease, it’s unlikely the budget shortfall scenario will ever materialize. We have about twenty years to come up with a solution.
When can I receive my benefits? That depends upon when you want to file for them! Your full retirement age, or the age at which you can receive your full scheduled benefits, will fall between age 65 and 67. The exact age depends upon your year of birth.
However, you can also file for benefits as early as age 62, if you’re willing to accept a permanently reduced monthly check. You also have the option of waiting beyond full retirement age to claim benefits, and your checks will be somewhat larger. There is no benefit to waiting beyond age 70, though.
If I decide to work in retirement, will I lose my Social Security benefits? If you claim benefits before your full retirement age, but continue to work, then part of your benefits might be taxed. On the other hand, you will receive an increased payment when you do reach full retirement age.
Once you reach full retirement age, you can make as much money as you want. Your benefits will not be taxed. This is great news for those of you who want to continue working while claiming your hard-earned benefits!