Planning to Retire in the 2030s? Read This Before You Collect Your First Social Security Check.
It's important for those within a decade or so of retirement to know where things stand, beyond the headlines.
The worst-case scenario might not be as bad as you think, and there's plenty of time to fix the problem.
The $23,760 Social Security bonus most retirees completely overlook ›
You may have heard that Social Security isn't exactly on the best financial footing, and that's true. Although the Social Security trust funds have trillions in reserves right now, the reality is that Social Security is paying significantly more money to beneficiaries than it is taking in, and the deficits are expected to get far worse in the coming years.
In fact, the latest estimates from the Social Security Board of Trustees project that the combined trust funds for the Old Age and Survivors Insurance and Disability Insurance trust funds will be depleted by 2035 unless something is done.
While this might sound like an emergency, especially if you're planning to retire in the next decade, it's important to take a step back and put things into perspective. So, here's what Social Security running out of money could mean for you, and what is the most likely scenario.
For sake of argument, let's say that the latest trustees' report projection happens, and Social Security's trust funds completely run out of money in 2035.
At the end of 2023, the latest year for which we have final data, the Social Security trust funds had a total of about $2.8 trillion in reserves. The program took in a total of $1.35 trillion in income between payroll taxes, taxes on certain Social Security benefits, and interest earned on the reserves, and paid out about $1.39 trillion -- a roughly $40 billion deficit that is withdrawn from the trust funds.
But the key thing to emphasize from that last paragraph is that most of Social Security's benefits are paid from income coming into the program, not from the reserves. So even if the deficits get much larger and the trust funds are depleted in 2035, there will still be payroll and other tax revenue coming in.
In fact, the latest projections found that even if the trust funds are allowed to run out of money entirely, incoming revenue will be able to cover 83% of scheduled benefits.
In other words, in a worst case scenario, if you were expecting a $2,500 monthly Social Security retirement benefit based on your work record (you can view an estimate for yours by logging in at ssa.gov), you would still receive monthly checks of $2,075 even if Social Security was completely out of money.
One big reason Americans are nervous about the Social Security shortfall is that it's been a known problem for a long time. I've been writing for The Motley Fool since 2011, and the Social Security Trustees Report from that year found that the trust funds would be depleted by 2036, just one year later than the current estimate. So why hasn't anything been done?
The short answer is that the ways to fix Social Security are politically divisive, and quite frankly, with a decade or more of financial runway, those in power simply haven't made Social Security reform a priority. To be fair, there have been some significant tweaks, such as eliminating the "file and suspend" loophole a few years ago, but nothing major has been done to extend the program's solvency.
Having said that, it's worth noting that we've seen a similar situation play out before. In the early 1980s, Social Security was just a few months away from running out of money, and the Social Security Amendments of 1983 helped stabilize the program for the next few decades. Just to name one provision, this round of reforms is why the full retirement age has gradually risen from 65 to 67 over the past couple of decades.
The bottom line is that history shows us that something will be done to bolster Social Security's financial situation, even if it happens at the last minute. And while the exact reform package remains to be seen, it's also worth noting that virtually nobody is talking about benefit cuts for those currently receiving payments, or those who are close to retirement age now.
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.The Motley Fool has a disclosure policy.
Planning to Retire in the 2030s? Read This Before You Collect Your First Social Security Check. was originally published by The Motley Fool
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fast Company
an hour ago
- Fast Company
The surprising power of being a generalist
I learned very early in my professional life that there are two paths to career success. Become an expert at one specific thing. Or master a few skills and leverage them simultaneously. The second option is working for me. Becoming a 'skills-powered' professional is how I can survive the future of work. The 'narrow expert' path doesn't work for everyone. New research from McKinsey shows that 44% of Americans want to switch careers, but nearly half say their biggest obstacle is a lack of skills. The biggest skills gap isn't a lack of technical knowledge; it's a lack of adaptability. Employers want people who learn fast, wear different hats, and solve cross-functional problems. In short, they want generalists. Just be enough You don't need to be everything. You just need to be enough of many things. You can't master everything. That's not the point. A generalist is strategically skilled in diverse areas. They are able to connect the dots others don't see. As David Epstein writes in his bestselling book Range, 'Modern work demands knowledge transfer — the ability to apply knowledge to new situations and domains.' To thrive in the future of work, think of yourself as a Swiss Army knife, built for the complexity of the productive environment. Skill stacking What you can do now is stack your skills. Then make them talk to each other. What makes you indispensable isn't in any one ability. It's a combination of transferable skills. Let's say you're decent at writing, coding, and psychology. Individually, none of those put you at the top. But together? You might be the professional an employer needs to design an app with a better user interface. And human behaviour knowledge is integrated into every interaction. Skill stacking can raise your market value by making you proficient (if not necessarily exceptional) in multiple areas. Make peace with not being 'the best' In any room, there's always someone who knows more about something. Becoming a generalist means focusing on what fits you. It means letting go of being 'the best' at one thing, especially when the rules keep changing. Become the most adaptable. The most curious. The most useful in unexpected ways. Employers want people with a diverse skill set who can adapt to the changing demands of work. A generalist has a beginner's mindset Every new skill you learn humbles you. It teaches you to learn faster, listen better, and synthesize across departments. Over time, you stop pursuing titles and start stacking tools that can help you become adaptable. Right now, talent is everywhere. AI can out-code us. Specialists can outshine in narrow fields. But no one else can have your exact set of skills, experiences, and insights. Your generalist path can become your defence against becoming obsolete. Don't just pursue a career. Build capability Careers are changing fast. Roles are disappearing. Even titles are evolving. But capabilities stick. Learn how to write clearly. Think critically. And present ideas. Invest in survival skills. They're what employers really want. Being good at many things, combined with the ability to switch context fast, is now a competitive edge. I'm not saying reject mastery. If something makes you come alive, by all means, hone in on it. But be open to building a bridge across many domains. You don't need to fit into one box The world of work won't stop changing. Professionals like you who adapt, connect and evolve will be ready for the uncertainties. It's how you stay useful when the rules change. The more skills you build, the more freedom you earn. Freedom to switch, lead, and secure your career. Stack your skills. You don't need to out-specialize anyone. You just need to be able to connect the dots that matter. And solve problems from multiple angles. A generalist knows how to learn, pivot, and apply knowledge across fields. Get into what excites you Become what psychologist Carl Rogers calls the 'fully functioning person.' Someone open to experience and always evolving. The best generalists are not just jacks-of-all-trades; they're masters of reinvention. Specialists see the trees. Generalists see the forest and the paths between them. You can offer both skills and perspective. That's why companies now prioritize learning ability over fixed expertise. Stay curious. Stay flexible. The future isn't about what you know. It's about how fast you can learn. Like Bruce Lee said, 'Be water, my friend.' That's how generalists win.
UPI
an hour ago
- UPI
Britian backs down on demand for 'backdoor' access to Apple data
The United Kingdom backed down on demand for 'backdoor' access to Apple users' data. File Photo by Keizo Mori/UPI | License Photo Aug. 19 (UPI) -- Britain backed down on demand for "backdoor" access to Apple users' data, U.S. Director of National Intelligence Tulsi Gabbard said. Gabbard wrote in a post on X that the British government agreed to drop the request for access to Apple's encrypted data after discussions between the new nations. "Over the past few months, I've been working closely with our partners in the U.K., alongside [President Doanld Trump] and [Vice President JD Vance], to ensure Americans' private data remains private and our Constitutional rights and civil liberties are protected," Gabbad wrote. "As a result, the UK has agreed to drop its mandate for Apple to provide a 'back door' that would have enabled access to the protected encrypted data of American citizens and encroached on our civil liberties." In February, Apple pulled its Advanced Data Protection end-to-end iCloud encryption from British customers' devices after the government requested access to the data. Following the events of the British government pressuring Apple to build a "backdoor" to allow government authorities to access user iCloud data. It was not immediately clear whether Apple would restore access to British users following the agreement. Apple cannot view the data of its customers who have activated its advanced data protection. "We have never built a backdoor or master key to any of our products or services, and we never will," the company said.
Newsweek
an hour ago
- Newsweek
Map Shows States With the Highest—and Lowest—Gas Prices
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. While fuel costs vary widely from state to state, with some enjoying far more favorable prices at the pump, recent successive declines have pushed nationwide averages to multiyear lows. According to the American Automobile Association (AAA), average gas prices for regular fuel were $3.13 on Tuesday, down from $3.41 this time last year and a record high $5.02 in June 2022. Meanwhile, the latest data from MarketWatch shows that crude oil prices have also fallen to $62.81 per barrel, down from $74.37 this time last year. Why It Matters Declining fuel prices could represent a major political win for President Donald Trump, who pledged during his campaign to lower energy costs for Americans and has signed several executive orders since returning to office with the goal of "unleashing" America's energy independence. What To Know According to the AAA, California has the highest average gas prices of any state at $4.49 per gallon, well over a dollar more than the national average. Regular prices have fallen from $4.60 in August 2024, though diesel prices have risen to $5.12 from $4.93 over the same period. California consistently ranks among the most expensive states when it comes to paying at the pump. The U.S. Energy Information Administration (EIA), the government's official statistical agency for energy, has attributed this to a combination of "state taxes and fees, environmental requirements, special fuel requirements, and isolated petroleum markets." California is followed by Hawaii and Washington at $4.46 and $4.40, respectively. This marks a 20-cent decline for the former and an equal increase for the latter. At the opposite end of the spectrum, Southern states tend to benefit from much lower average gas prices. Oklahoma is bottom of the list at $2.67 a gallon, followed by Mississippi and Louisiana at $2.69 and $2.73, respectively. Declining gas prices helped temper the Consumer Price Index (CPI) for July, which the Bureau of Labor Statistics released last week. The CPI increased by a seasonally adjusted 0.2 over the month—following a 0.3 percent gain in June—and was up 2.7 percent on a 12-month basis. However, the energy index dropped 1.1 percent as the gasoline index fell 2.2 percent from June. The latter is down 9.5 percent over the past year. What People Are Saying Robert McNally, the founder and president of Rapidan Energy Group, told The New York Times that falling fuel costs were "like a dream come true for President Trump." He added: "For American consumers, it's like a visible tax cut. You see it every day, even if you're not tanking up that day." Trump said in a campaign speech at the Economic Club of New York in September: "Within 12 months of taking office, it will be an economic revival of our country like no one has ever seen before. Energy was what caused our problem initially. Energy is going to bring us back. That means we're going down and getting gasoline below $2 a gallon." What Happens Next According to the EIA, energy costs are expected to fall further into 2026. Last week, the agency lowered its forecasts for average brent crude prices next year to an average of $51 per barrel, down from its July forecast of $58. Last month, Patrick De Haan, GasBuddy's head of petroleum analysis, told Reuters that the national average gas price had a "good chance of falling below $3 per gallon in September."
