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Newsweek
18 hours ago
- Business
- Newsweek
Americans Fear End of Social Security as They Know It
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Seven in 10 Americans worry that Social Security won't be there for them when they retire, according to new survey from the Transamerica Center for Retirement Studies (TCRS). TCRS is a division of Transamerica Institute (TI), a nonprofit, private operating foundation, and conducts one of the largest and longest-running annual retirement surveys of its kind. For generations, Social Security, which celebrated its 90th anniversary on August 14, has formed the bedrock of retirement income for tens of millions of Americans, and also pays out benefits to disabled people and survivors of deceased workers. However, despite its enduring popularity and importance, it faces a looming insolvency crisis that lawmakers have less than 10 years to solve. The survey from TCRS, which polled 10,009 adults above the age of 18 between September 11 and October 17, 2024, found that among non-retirees, 71 percent agreed with the statement: "I am concerned that when I am ready to retire, Social Security will not be there for me." Almost nine in 10 Americans (87 percent) have one or more greatest retirement fears, ranging from health to financial. The top two greatest fears are declining health that would require long-term care (39 percent) followed by Social Security being reduced or ceasing to exist in the future (37 percent). According to the latest report from the Social Security Trustees, the program's two trust funds—the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) funds—are projected to reach insolvency by 2034. At that point, benefits would be funded solely through incoming payroll taxes, triggering an automatic cut of around 21 percent unless Congress takes action. While several options have been tabled by lawmakers to fix the issue, such as The Fair Share Act and raising the retirement age, no meaningful progress has been made. Doug Carey, founder of WealthTrace and a chartered financial planner, told Newsweek that the main driver of fears around Social Security's longevity is this political inaction. "I believe it's the political climate and the lack of action over many administrations," he said. "Most politicians do not want to touch benefits since they believe it will only hurt their reputation and reelection chances now. That is why this keeps getting pushed into the future until it simply has to be addressed." Stock image/file photo: An elderly woman holding an empty wallet. Stock image/file photo: An elderly woman holding an empty wallet. GETTY The study also revealed Americans are concerned about seeing their personal savings through their post-working years. Sixty-three percent of Americans said they either believe they won't save enough to meet their needs by the time they retire or, if already retired, they failed to save enough—28 percent "strongly agree" and 35 percent "somewhat agree" with that statement. And for nearly a third of Americans—32 percent—Social Security is expected to be their primary source of retirement income. That compares with 29 percent who expect to rely primarily on retirement accounts, 12 percent on other savings and investments, and 11 percent on continued work. Only 9 percent see a company-funded pension as their main income source. The survey also showed that reliance on Social Security is even greater among retired women with six in 10 women retirees (59 percent) indicating it is their primary source of income, compared with 47 percent of men retirees. For those not yet retired, 29 percent of women and 22 percent of men said Social Security was their expected primary source of retirement income. Carey added that many Americans are already adjusting their retirement plans based on the assumption of reduced benefits. "What many people are doing is simply assuming their benefits will be cut by anywhere from 25 percent to 50 percent. They can then plan accordingly by retiring later, saving more, or changing their planned spending in retirement," he said. Some, Carey noted, choose to claim benefits early at age 62 to "lock in" payments, believing they are less likely to be reduced once started. Jackson Ruggiero, co-founder of told Newsweek that the poll's findings are unsurprising. "The program is facing real financial challenges, but just as importantly, people don't trust Congress to fix it in time," he said. "Because of this uncertainty, many people are changing how they plan for retirement. Younger workers especially are focusing more on personal savings through 401(k)s and IRAs, and some are assuming they'll get little or nothing from Social Security. That's understandable, but also a bit extreme." Looking forward, Ruggiero advised a balanced approach for those concerned about their retirement savings and the future of Social Security. "Plan like your benefits might be reduced, not gone. Save what you can now, take advantage of employer retirement plans, and if possible, delay taking Social Security to get a bigger monthly check," he said. Both experts agreed on one point—Congress is moving too slowly to fix the looming insolvency dilemma. "They are doing nothing, and I predict they won't do anything until the year where it's clear Social Security benefits will have to be cut. Currently that is 2033," Carey warned. This is not the first time Social Security has faced a funding cliff. In the early 1980s, the trust funds were similarly close to depletion. Lawmakers responded with reforms that included faster payroll tax increases, a gradual rise in the retirement age, and taxation of some Social Security benefits. "Social Security has served as the cornerstone of retirement income since its establishment nine decades ago. It provides millions of older Americans with guaranteed income, so that they can retire with greater financial security," Catherine Collinson, CEO and president of Transamerica Institute, said. "With the estimated depletion of the Social Security trust funds looming large, now is the time for policymakers to identify reforms that can help ensure the program's sustainability for the next 90 years."
Yahoo
28-06-2025
- Business
- Yahoo
5 Ways Increasing Social Security Retirement Age Could Disrupt Financial Plans
The Social Security program faces a financing shortfall that, if left unaddressed, would result in a benefit reduction in under a decade. Lawmakers have considered raising the full retirement age, but how would that affect the way you plan, save and prepare for retirement? Learn More: Consider This: 'A higher Social Security age will put stress on many people's retirement plans,' Doug Carey, CFA, owner and founder of retirement and financial planning software WealthTrace, wrote in an email. Here's what that could mean for your financial strategy. According to Phillip Battin, president and CEO of Ambassador Wealth Management, raising the full retirement age for Social Security would mean many people would have to work longer than planned, especially for those in physically demanding or stressful jobs who may struggle to continue working. 'Those without stable jobs or good benefits could face even greater challenges, as they might need to keep working just to maintain health insurance,' he added. Carey has talked his clients through this exact scenario, and said it often means pushing retirement back by a year or more. 'I have run through this scenario with a lot of my customers, and I found that for most of them, for every year the Social Security start age is increased, they will have to work at least one more year than they had planned,' Carey wrote. Explore Next: People may need to rely more on their personal savings if the lawmakers increase the Social Security retirement age. This may be especially difficult for those who are unemployed or unable to work. 'Those individuals may have to make limited savings last longer while dealing with higher healthcare costs without government help,' Battin pointed out. 'Having good health insurance, long-term disability coverage and emergency savings is more important than ever.' For those without enough personal savings to last them until retirement, it could force some to withdraw retirement funds early. 'If Social Security starts later, retirees must depend more on their savings, such as 401(k)s, IRAs and other retirement vehicles,' according to Battin. 'This would require saving more and spending less while working to prepare for the future.' Battin also noted that in addition to putting pressure on people's savings, it would also reduce the time for those savings to grow. Taking retirement funds out too soon often leads to unexpected tax bills and a 10% penalty, according to the IRS. 'Early withdrawals from traditional retirement accounts could also lead to higher taxes and a penalty if taken before age 59½,' Battin added. 'Many individuals would need to thoroughly review and adjust their retirement plans if the Social Security timeline changes,' Batin advised. Financial advisors, retirement calculators and budgeting tools can all help better plan for retirement. 'In order to secure a financial future, it is sensible to understand and prepare for these changes now, no matter the current career stage,' he added. This is certainly worse for those closer to retirement, but Carey explained that younger people can come up with a plan to save more early on. 'I found that a 35-year-old who plans on retiring at age 65 would need to save about $1,100 extra per year to a retirement account in order to make up for an increasing Social Security start age of two years,' Carey noted. 'However, if a person is already 55, they would have to save an extra $5,000 per year.' More From GOBankingRates 8 Common Mistakes Retirees Make With Their Social Security Checks This article originally appeared on 5 Ways Increasing Social Security Retirement Age Could Disrupt Financial Plans Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Yahoo
08-03-2025
- Business
- Yahoo
6 Stupidest Money Mistakes You Can Make This Year, According to Experts
Your money is either working for you or against you. If you make dumb financial moves, you're going to regret it. The worst part is that most people don't even realize they're making these mistakes until it's too late. Consider This: Find Out: Here are the stupidest money mistakes you want to avoid this year. The stock market has been volatile this year, and it's easy to get scared and feel like you should sell your assets before you lose money. That's a huge mistake! 'One of the worst mistakes you could make this year is freaking out over a market dip and selling your stocks or 401(k) at a loss. That's how people turn temporary downturns into real losses,' said Joseph Camberato, CEO at National Business Capital. 'With a new administration, the market might react negatively in the short term, and that's perfectly normal. But don't try to time the market. Stick with the S&P 500 and quality stocks.' Read More: Retirement might seem like a distant problem, something to worry about later. However, every year you delay saving for retirement, you lose out on the magic of compound interest. Saving early and consistently is of utmost importance due to the power of compounding. There's a huge difference between starting savings at age 25 versus age 35. 'Here's an example: If a 25-year-old starts saving $20,000 per year for 30 years at an 8% annual return, they would have $2.5 million saved at age 55. But if this person instead started at age 35 and saved until age 55, they would only have $980,000 saved,' said Doug Carey, founder and president of WealthTrace. 'Delaying saving by 10 years cost this person over $1.5 million. That is the power of compounding at work.' Digital currencies are highly volatile, and speculating on them is the worst mistake you can make. 'The crypto market has never been a good place to invest. At times it has been a profitable place for some to speculate. My belief is, 'Just Say No!' should guide your actions with respect to crypto,' said Robert Johnson, professor of finance at Creighton University and CEO at Economic Index Associates. 'One cannot invest in the wide array of cryptocurrencies. One can only speculate. 'Investing' in Bitcoin and other cryptocurrencies is pure, unadulterated speculation. I put investing in quotes because this is not investing; it's speculating.' Having money is good, but holding too much cash is dumb with inflation. 'Having an emergency fund and cash available to pay bigger bills throughout the year is necessary. However, at some point, it becomes too much. Most people should have three to six months of cash set aside for emergencies,' said Trevor Ausen, founder of Authentic Life Financial Planning. 'You also should have some cash available for larger expenses that happen throughout the year (car insurance and repairs, home repairs, medical bills). After that, 100% of your money should be invested. The only exception is if you have other larger purchases that you're saving for, such as a home or car purchase and big travel,' Ausen added. While savings accounts can grow your money, thinking about it as some sort of investment strategy is stupid. 'Yeah, 4 to 5% sounds nice compared to what we had before. We're all happy our interest is better than 0.000001%, but if you're just letting your money sit there instead of growing it, you're basically letting inflation eat away at your future,' added Lucas Barcelo, founder of Thrivin Life. Debt is a wealth killer. Incurring unnecessary debt is way riskier. 'There's a lot of uncertainty about how the economy will look in the next six to 12 months. This is not the time to incur debt to add an addition to your house or finance a big trip,' said Ashley Morgan, debt and bankruptcy lawyer at Ashley F. Morgan Law. 'Keep any debt purchases to a minimum. If you need to buy a new car, try to limit the amount financed as much as possible. Limiting debt is always ideal, but right now, making sure you have limited it as much as possible is critical.' More From GOBankingRatesI'm Retired and Regret Not Claiming Social Security at 65 -- Here's Why This article originally appeared on 6 Stupidest Money Mistakes You Can Make This Year, According to Experts Sign in to access your portfolio
