JUNE 2024 Newsletter: Is Social Security Going to Run Out in Your Lifetime?

Concord River Financial

June 07, 2024

We get regular updates on the Social Security trust fund. In early May, the Social Security Board of Trustees announced that the trust funds had revenue to pay full benefits until 2035. Generally speaking, the headline's tone is very grim and indicates that the fund will be totally depleted in a matter of years, but this isn’t what’s really happening.¹

Social Security has had a pretty good year. This projection is a year later than the one offered in 2023 and can be chalked up to more people working and, as a result, more people making the Social Security contributions you see in every paycheck.¹

If the Social Security trust fund coffers were to disappear completely, it would imply that no action would be taken to correct the matter between now and 2035. It seems more likely that political pressure would be placed on Washington to fix the problem before it got to that point.

If the trust fund were to run out, it doesn’t mean that Social Security payments would come to a screeching halt. The program would still be taking money out of paychecks and using that money to pay those collecting payments. It's uncertain what might happen to payments, but Social Security has suggested they will continue.

The dour headlines may contribute to several persistent myths about the venerable program. A 2023 survey by the Nationwide Retirement Institute discovered that three out of four adults aged 50 and older believe that Social Security will run out in their lifetime.²

This belief may contribute to other decisions they make that affect their Social Security payments, namely that they don’t wait until they can claim all of their benefits. According to the most recent numbers, the most popular age to begin collecting benefits is 62; in 2022, 29 percent of new beneficiaries started collecting as early as possible, while 62 percent claimed before the full retirement age.²

Not waiting to full retirement age can cause up to a 30 percent cut in benefits. Also, waiting a full year past full retirement, up to age 70, can lead to an 8 percent increase in benefits. That’s per year.²

While not everyone can wait that long to start taking benefits, sometimes for very good reasons, the fact that so few do so could be due to a misunderstanding. Even so, only 16 percent wait to full retirement age, and only 10 percent wait until age 70 and take advantage of those larger benefits.²

Despite all our savings and investing, Social Security still provides many Americans the lion’s share of retirement income. A majority of workers (88 percent) anticipate relying on Social Security for retirement income, and that’s true for a number of our clients. Social Security should remain important to retirees' lives for the foreseeable future.³

^{1. SSA.gov, May 6, 2024, “Strong Economy, Low Unemployment, and Higher Job and Wage Growth Extend Social Security Trust Funds to 2035”}
^{2. CNBC.com, May 19, 2024, “Social Security’s ‘biggest myth’ leads people to claim early, expert says. Even a slight delay can boost retirement income”}
^{3. EBRI.org, April 25, 2024, “Results From the 2024 Retirement Confidence Survey Find Workers’ and Retirees’ Confidence Has Not Recovered From the Significant Drop Seen in 2023, but Majorities Remain Optimistic About Retirement Prospects”}

Congratulations to Administrative Associate,Teresa Marchitto, who recently passed her Life & Health Insurance examination. We are so proud to have Teresa as a member of the CRF team!
Our Acton, MA office location is now closed, and we have settled intoour new home officeat 319 Littleton Road, Suite 303, in Westford, MA 01886. This location is conveniently located just 1.5 miles from the intersection of Route 495 and Boston Road. Should you wish to stop in,we kindly ask that you reach out to us beforehand so that we can anticipate your visit. We look forward to seeing you!
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Are Social Security Benefits Taxable?

If you receive Social Security benefits, you may have to pay federal income tax on some of these benefits. Your payment will depend on your specific income and filing status.

To find out whether your Social Security benefits are taxable, if you are single, take half of the Social Security money you received throughout the year and add it to your other income, including pensions, wages, interest, dividends, and capital gains. If the total for an individual exceeds $25,000, part of your benefits may be taxable.

If you are married filing jointly, take half of the Social Security money you received throughout the year plus half of your spouse's Social Security benefits; add both amounts to your combined household income. If the total is over $32,000, part of your benefits may be taxable.

The IRS's website delineates the taxable percentage of benefits based on the above calculation. These percentages vary between 50% to 85% and depend on your filing status and income levels. For example, if you are filing as a single person with $25,000 to $34,000 income, 50% of your Social Security benefits may be taxable.

TheInteractive Tax Assistant on IRS.govcan help you determine whether your Social Security benefits are taxable and, if so, by how much. Additionally, we offer several "Tax Tools" availablevia our website.

^{*This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.}

^{Tip adapted from IRS.gov}

Do Not Put Off Software Updates

Many people might select "Remind me later" when we see an update alert. However, many software updates are created to fix security risks. Keeping software up to date is an easy way for us to stay safer online.

Keep Software Up to Date With Three Simple Steps:

Watch for Notifications - Our devices will usually notify us that we need to run updates. This includes our devices’ operating systems, programs and apps. It’s important to install ALL updates,especially for our web browsers and antivirus software.
Install Updates as Soon as Possible - When notified about software updates, especially critical updates, we should be sure to install them as soon as possible. Malicious online criminals won’t wait, so we shouldn’t either!
Turn on Automatic Updates - With automatic updates, our devices will install updates without any input from us as soon as the update is available—Easy! To turn on the automatic updates feature, look in the device’s settings, possibly under Software or Security. Search settings for “automatic updates” if needed.

^{Tip adapted fromhttps://www.cisa.gov/secure-our-world/update-software}

I protect you. I sit on a bridge. You can see through me. People walking by might wonder what I hide. What am I?

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Last Month's Riddle:They have not flesh, nor feathers, nor scales, nor bone. Yet they have fingers and thumbs of their own. What are they?
Answer:Gloves