It’s summer. The sun is shining, and there’s a beautiful breeze. This time of year in Chicago can be pretty great. But sadly, we’ve all been hearing negative things in the news about the latest Social Security challenges. Hopefully, this will be addressed, but if you’re unsure, maybe there are some things you can do that won’t be a recipe for disaster.
You should know…
According to the Social Security Board of Trustees 2016 report: more than $2.8 billion in excess cash from the Trust will be completely exhausted by 2034. Once this money is gone, the Trustees have estimated that across-the-board benefit cuts of as much as 21% may be needed to sustain payouts through the year 2090.
What this means is that both retirees and those approaching retirement now need to consider how Social Security cuts may impact their retirement plans. This can quickly start to feel overwhelming.
The first step is to lay out all of your income sources, projected expenses in retirement, and how much income you’ll need to sustain your lifestyle. Lifestyle takes into account times of good market performance, poor market performance, as well as additional spousal income (both with and without). You’ll also want to take into account future inflation. (This could be complicated if you are unfamiliar with totaling and projecting income streams with inflation taken into account. As a result, you might want to lead this first step to a professional retirement planner. The social security office can provide you with your social security statements to help!).
I mentioned the social security statements, and those are critical. You’ll want to both consider the income that will be received from Social Security.
- First, if both spouses are alive.
- Second, if the husband passes away first.
- Third, if the wife passes away first.
In short, what you’ll want to see is what your Social Security income will be in those three situations, than deduct up to 21% from that amount (to see the projected worse case scenario–its likely any cuts would hit the wealthy and upper middle class first), and compare that with the projected amount you will need to maintain your lifestyle, taking into account inflation.
If you need help with that projection, or figuring out the extent–if any–that Social Security cuts are likely to impact you, we can help you make an assessment with a free consultation. There are many pros and cons as to how and when it’s best to take Social Security benefits. This particular situation is just the latest twist in that analysis. We find that its always specific to each family.
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