Why Are So Many Retirees Filing for Social Security Earlier?
But like other retirees in recent months, he was watching the Trump administration's shake-up at the Social Security Administration during a time when the broader economic outlook appeared increasingly uncertain.
Concerns about the economy and access to benefits nudged him to file earlier than he had anticipated, even if it might cost him over the long run.
He wasn't the only one: An additional 276,000 retirees claimed benefits on their earnings record this fiscal year through April, according to the Urban Institute, a research group, a 13 percent jump from the same period a year ago. Officials inside the Social Security Administration called the rise 'dramatic,' and though there were some other reasons for the surge, program experts say anxiety appeared to play a meaningful role.
'It is worrisome because for most people, claiming early is not a good decision,' said Jack Smalligan, a senior policy fellow at the Urban Institute. 'They're nervous about the threats to the Social Security Administration and their benefits, while simultaneously looking at their 401(k), if they have one, and worrying about that.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Axios
6 minutes ago
- Axios
Social Security recipients set to face an $18,000 benefit cut in just seven years
Retirees are facing the prospect of substantial Social Security cuts in just seven years, sooner than projected, due to the "big, beautiful bill," per an analysis out Thursday from the Committee for a Responsible Federal Budget. Why it matters: If policymakers don't stop this from happening, it would at least double the poverty rate of America's seniors, per several estimates. By the numbers: The new analysis projects a 24% cut to benefits by late 2032. That's equal to an $18,000 annual benefit cut for a dual-earning couple who both retire in 2033. They also might experience reduced healthcare access, per the analysis, due to an 11% cut in Medicare hospital payments. The percentages would grow over time, as the population ages and fewer young Americans are paying into the system. How it works: The trust fund is effectively the money the federal government takes in from Social Security taxes. For decades, the system took in more in taxes than it paid out, the Treasury department then invested the surplus. In 2021, it started tapping reserves to keep paying benefits. Once the reserves are depleted, benefits would be "pay-as-you-go," paying out money as taxes come in. That the trust fund would be depleted in the 2030s has long been known. Zoom in: The tax cuts in the big bill and the increase in the deduction for seniors, specifically, would reduce Social Security's incoming tax revenue — and speed up depletion by about a year, per the CRFB. The big picture: Social Security is arguably the most popular government benefit — most Americans either receive benefits or know someone who does — the vast majority of Americans believe in its importance, according to recent polling. The bottom line: Most policy wonks and Social Security advocates believe that it's highly unlikely that Congress would sit back and watch benefits get cut like this.
Newsweek
8 minutes ago
- Newsweek
Social Security: Young Americans May Lose $110,000 to Keep Program Afloat
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Social Security, a foundational program for U.S. retirees and disabled Americans, has come under renewed scrutiny as funding shortfalls loom. A new report by the Cato Institute warned that today's young workers might lose up to $110,000 in lifetime earnings to keep the program afloat. Why It Matters With the Social Security Trust Fund projected to reach insolvency in the next decade, younger workers now face the possibility of significant financial sacrifices to maintain the system for current and future beneficiaries. More than 60 million Americans receive benefits every month. And according to Justice in Aging, Social Security lifts more than 22 million people out of poverty, including over 16 million older adults and almost 1 million children. he Social Security Administration office in Brownsville. he Social Security Administration office in Brownsville. Robert Daemmrich Photography Inc/Corbis via Getty Images What To Know Social Security faces a potential crisis as its trust fund is predicted to be depleted by the mid-2030s, according to recent projections. The primary driver is an aging population, particularly as Baby Boomers retire and a shrinking base of younger workers are paying into the program. As a result, the Social Security Administration would only be able to pay about 80 percent of scheduled benefits unless funding solutions are enacted. The Cato Institute reported that keeping Social Security solvent in its current form would require today's young workers—those just entering the labor market—to contribute significantly more over the course of their careers. If changes are not made, these workers could see a reduction equivalent to $110,000 of their lifetime earnings due to higher taxes and/or reduced benefits, according to the Cato Institute. That figure is based on the latest report from the Social Security Trustees, which said Congress would need to hike the payroll tax rate immediately and permanently by 3.65 percentage points, from 12.4 to 16.05 percent, to close the program's $25 trillion funding gap and continue to send out scheduled payments. "That means less discretionary income in each paycheck, which could have ripple effects on their day-to-day finances and long-term savings," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9 innings podcast, told Newsweek. "A tax increase would be a hit to growth as less discretionary spending means less in corporate earnings." According to the Cato Institute, this cut would be equivalent to giving up 20 months of pay at the worker's average monthly wage. "There are endless variables affecting Social Security, but in the end, the math does not lie," Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. "To keep the program going, there will be adjustments in the current payroll taxes, income caps, and full retirement age. We could see a return of the Retirement Earnings Test and may even see means testing for the highest income retirees." This could cause outrage across the general public, which has generally favored targeting higher earners rather than taking away from future retirees' payments. A University of Maryland Program for Public Consultation survey showed that 53 percent of American adults considered it acceptable to reduce Social Security benefits exclusively for the Top 40 percent of income earners. This targeted reduction would address approximately 23 percent of the program's projected funding shortfall. There was also bipartisan support for raising the retirement age, which could close an additional 15 percent of the funding gap. What People Are Saying Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Younger workers, especially the youngest of the Millennials and all of Gen Z and beyond, should expect Social Security to look different for them than it does now. Adjustments to Social Security are rarely popular, but in the past Congress has been willing to act in the face of dire circumstances, such as in 1983 when the Full Retirement Age was extended." Kevin Thompson, the CEO of 9i Capital Group and the host of the 9 innings podcast, told Newsweek: "While such an increase would extend the solvency of Social Security by about 75 years, it's not a complete solution. The real fix would likely require both raising the payroll tax and removing the income cap. But let's be honest—that kind of proposal is a tough sell politically. Running on a platform to raise taxes rarely gains traction, even when it's tied to securing the future of Social Security." Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "There's been an assumption made by Americans for decades now, and that is regardless of warnings and political posturing, Social Security will always be there to provide for retirees. The reality is there's a tremendous shortfall coming in the next decade, and if Congress doesn't act, beneficiaries will see their monthly payments dramatically reduced." What Happens Next With Social Security's financial future uncertain, Congress and the public are set to debate possible reforms, including benefit reductions for higher earners, payroll tax increases, and changes to the retirement age. The conversation will likely intensify as insolvency draws nearer in the next decade, with any enacted policy changes affecting both current retirees and younger generations entering the workforce. No official policy changes have yet been passed, but the heightened awareness and survey support for targeted reform suggest continued bipartisan attention to the problem in upcoming legislative sessions. "There are obviously different solutions to the shortfall that don't involve raising that percentage, but it does present a grim prediction for the American workforce if Congress doesn't act on a more efficient solution," Beene said.
Fast Company
36 minutes ago
- Fast Company
Trump rollback on clean energy subsidies stalls major solar, wind projects and manufacturing plans
Singapore-based solar panel manufacturer Bila Solar is suspending plans to double capacity at its new factory in Indianapolis. Canadian rival Heliene's plans for a solar cell facility in Minnesota are under review. Norwegian solar wafer maker NorSun is evaluating whether to move forward with a planned factory in Tulsa, Oklahoma. And two fully permitted offshore wind farms in the U.S. Northeast may never get built. These are among the major clean energy investments now in question after Republicans agreed earlier this month to quickly end U.S. subsidies for solar and wind power as part of their budget megabill, and as the White House directed agencies to tighten the rules on who can claim the incentives that remain. This marks a policy U-turn since President Donald Trump's return to office that project developers, manufacturers and analysts say will slash installations of renewable energy over the coming decade, kill investment and jobs in the clean energy manufacturing sector supporting them, and worsen a looming U.S. power supply crunch as energy-hungry AI infrastructure expands. Solar and wind installations could be 17% and 20% lower than previously forecast over the next decade because of the moves, according to research firm Wood Mackenzie, which warned that a dearth of new supplies could slow the expansion of data centers needed to support AI technology. Energy researcher Rhodium, meanwhile, said the law puts at risk $263 billion of wind, solar, and storage facilities and $110 billion of announced manufacturing investment supporting them. It will also increase industrial energy costs by up to $11 billion in 2035, it said. 'One of the administration's stated goals was to bring costs down, and as we demonstrated, this bill doesn't do that,' said Ben King, a director in Rhodium's energy and climate practice. He added the policy 'is not a recipe for continued dominance of the U.S. AI industry.' The White House did not respond to a request for comment. The Trump administration has defended its moves to end support for clean energy by arguing the rapid adoption of solar and wind power has created instability in the grid and raised consumer prices – assertions that are contested by the industry and which do not bear out in renewables-heavy power grids, like Texas' ERCOT. Power industry representatives, however, have said all new generation projects need to be encouraged to meet rising U.S. demand, including both those driven by renewables and fossil fuels. Consulting firm ICF projects that U.S. electricity demand will grow by 25% by 2030, driven by increased AI and cloud computing – a major challenge for the power industry after decades of stagnation. The REPEAT Project, a collaboration between Princeton University and Evolved Energy Research, projects a 2% annual increase in electricity demand. With a restricted pipeline of renewables, tighter electricity supplies stemming from the policy shift could increase household electricity costs by $280 a year in 2035, according to the REPEAT Project. The key provision in the new law is the accelerated phase-out of 30% tax credits for wind and solar projects: it requires projects to begin construction within a year or enter service by the end of 2027 to qualify for the credits. Previously the credits were available through 2032. Now some project developers are scrambling to get projects done while the U.S. incentives are still accessible. But even that strategy has become risky, developers said. Days after signing the law, Trump directed the Treasury Department to review the definition of 'beginning of construction.' A revision to those rules could overturn a long-standing practice giving developers four years to claim tax credits after spending just 5% of project costs. Treasury was given 45 days to draft new rules. 'With so many moving parts, financing of projects, financing of manufacturing is difficult, if not impossible,' said Martin Pochtaruk, CEO of Heliene. 'You are looking to see what is the next baseball bat that's going to hit you on the head.' About face Heliene's planned cell factory, which could cost as much as $350 million, depending on the capacity, and employ more than 600 workers, is also in limbo, Pochtaruk said in an interview earlier this month. The company needs more clarity on both what the new law will mean for U.S. demand, and how Trump's trade policy will impact the solar industry. 'We have a building that is anxiously waiting for us to make a decision,' Pochtaruk said. Similarly, Mick McDaniel, general manager of Bila Solar, said 'a troubling level of uncertainty' has put on hold its $20 million expansion at an Indianapolis factory it opened this year that would create an additional 75 jobs. 'NorSun is still digesting the new legislation and recent executive order to determine the impact to the overall domestic solar manufacturing landscape,' said Todd Templeton, director of the company's U.S. division that is reviewing plans for its $620 million solar wafer facility in Tulsa. Five solar manufacturing companies – T1 Energy, Imperial Star Solar, SEG Solar, Solx and ES Foundry – said they are also concerned about the new law's impact on future demand, but that they have not changed their investment plans. The policy changes have also injected fresh doubt about the fate of the nation's pipeline of offshore wind projects, which depend heavily on tax credits to bring down costs. According to Wood Mackenzie, projects that have yet to start construction or make final investment decisions are unlikely to proceed. Two such projects, which are fully permitted, include a 300-megawatt project by developer US Wind off the coast of Maryland and Iberdrola's 791 MW New England Wind off the coast of Massachusetts. Neither company responded to requests for comment. 'They are effectively ready to begin construction and are now trapped in a timeline that will make it that much harder to be able to take advantage of the remaining days of the tax credits,' said Hillary Bright, executive director of offshore wind advocacy group Turn Forward.
