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Jan. 29, 2021, 11:01 a.m. EST

Will Social Security still be there if I wait to claim it?

Concerns about the solvency of Social Security have some wondering if they should take it sooner

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By Harriet Edleson

Everett Collection

If you’ve been planning to wait until age 70 to claim your Social Security retirement benefits, but are worried your full benefit won’t be there when you get there, you’re not alone.

There’s been no shortage of hand-wringing about the health of the federally run retirement program, and you’ve surely heard projections that benefits might be cut by 20% or more in 2032. Does that mean you should take benefits earlier than planned to lock in your payout?

“For those aiming to wait until age 70 to claim, don’t waffle,” said Nancy Altman, president of Social Security Works, a nonprofit advocacy group. “It’s the wrong way to look at” when to claim, she said. “You’ll get a permanently reduced benefit. You may need those benefits later in life.

People should decide when to claim their benefits based on their individual circumstances,” she said.

The Congressional Budget Office has projected future cuts to Social Security retirement benefits that may panic some people. Yet, the labor market rebound has been stronger than CBO anticipated, CBO director Phillip L. Swagel said in December.

Benefit cuts are not inevitable. With a new administration and Congress in place, Social Security legislation could find its way to lawmakers in the next year or two.

“The idea that we can’t afford” to fix Social Security to avoid cuts “isn’t accurate,” said Altman, also the author of several books including The Truth About Social Security.

Despite polarization around many issues including a stimulus bill during the pandemic, Altman said Americans are not polarized on Social Security and Congress can pass legislation that would prevent benefit cuts in the future.

“You have to distinguish hard facts from speculation,” said policy analyst and economist Henry J. Aaron, a senior fellow at the Brookings Institution. “Social Security has plenty of money to pay benefits for the next 10 to 15 years. It has big reserves.”

Yet, changes have to be made to close the financing gap to avoid future benefit cuts. “Nobody wants cuts,” Altman said. Seniors are “always voters,” and would vote lawmakers out of office if they cut benefits.

Social Security retirement benefits are financed through an annual payroll tax of 6.2% paid by employees and 6.2% paid by employers, up to incomes of $142,800 this year, a threshold that increases each year. Self-employed people pay 12.4%.

Originally, the payroll tax covered the cost of paying most of Social Security retirement benefits. Other much smaller sources of revenue come from interest earnings on the Social Security Trust Fund and tax paid by those who receive Social Security benefits

In short, there are two basic ways to protect the future of Social Security retirement benefits. One is to raise revenue through payroll taxes and the other is to cut benefits, Aaron said. Most legislation introduced in the last Congress, but not passed, proposed raising revenues.

Under the current system, the earliest you can claim is age 62, but you will receive reduced benefits for the rest of your life. Claiming at your full retirement age gives you 25% to 30% more, and waiting until 70 gives you delayed retirement credits of 8% per year between ages 66 and 70, if you were born in 1943 or later.

For example, say your payout at 66, your full retirement age, would be $1,000 a month. If you claimed early at age 62, you’d receive just $750 a month. If you wait until 70, you get $1,320 per month.

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