5 Social Security Facts Every Soon-To-Be Retiree Should Know. Personal finance expert Suze Orman, a New York Times bestselling author, emphasizes the importance of distinguishing fact from fiction in retirement planning. In light of the 2023 Schroders US Retirement Survey, which reveals a lack of confidence in the Social Security system among Americans, Orman shares crucial insights to help individuals prepare for their retirement.
1. Social Security Funding Beyond 2024
By 2024, Social Security may face challenges in fully covering benefits owed to retirees. Orman suggests acknowledging the potential decrease in payouts but underscores that even a 75% payout is better than zero. Advisers like Jay Zigmont recommend younger clients view Social Security as a bonus, urging a conservative approach to expectations.
2. Historical Fixes and Future Predictions
Orman highlights the precedent of Social Security shortfalls in 1983, emphasizing that necessary changes were implemented without adversely affecting near-retirees. This history serves as a basis for her belief that impending adjustments will likely focus on younger demographics, providing reassurance to those on the brink of retirement.
3. Optimal Timing for Claiming Benefits:
Waiting to claim Social Security benefits, if health permits, is crucial. Orman underscores that a 76% higher payout is achievable if one waits until age 70. Zigmont echoes the sentiment, emphasizing the potential for a larger monthly benefit, along with cost-of-living adjustments, making delayed claims financially advantageous.
4. Strategic Delay for Highest Earners:
For married couples, Orman stresses the significance of the highest earner delaying Social Security collection. This strategic approach ensures that the surviving spouse receives the higher benefit, whether it’s their own or that of the deceased spouse, maximizing financial security for the household.
5. Flexible Claiming Options Between 62 and 70
Contrary to an either/or decision at age 62 or 70, Orman highlights the flexibility of claiming benefits any time between these ages. She emphasizes that delaying increases the monthly payout. Zigmont encourages individuals to assess their financial situation, suggesting a wait of 6-12 months for a more substantial benefit throughout their lifetime.
[irp]Conclusion
In the face of ongoing uncertainties and potential shortfalls in the Social Security system, understanding its dynamics is crucial. Suze Orman’s five guidelines serve as valuable insights, empowering soon-to-be retirees to make informed decisions and navigate the complexities of Social Security with confidence.
