Should You Claim Early because of Social Security’s financial issues? - Motley Fool
Well, the short answers is no. Social Security does, indeed, have financial issues which could mean a cut in benefits in about 10 years if the SS Trust Fund runs dry, but fear of total program bankruptcy is unfounded. Social Security will always be there and always pay benefits, so making your claiming decision based on unfounded fear is just a bad idea, as clearly suggested in this Motely Fool article. As the article says, the worst case scenario is a 20+% reduction in benefits unless Congress acts to reform the program.
What would that reform look like? Although there are numerous possible program changes being discussed, it’s impossible to predict which changes will actually occur. Thus, the decision to claim early based on fear of the unknown is simply not a wise strategy. Historical precedent suggests that those who are already eligible to claim, including those who are only just eligible but not yet collecting, won’t be affected. This excellent Motely Fool perspective by Trevor Jennewine presents a well reasoned argument for ignoring the uncertainty of future Social Security program changes and, instead, basing your Social Security claiming decision on your known personal circumstances. Click here to read more.
As an aside, here at the AMAC Foundation, and despite the current political climate in Washington, D.C., we do not believe Congress will ever allow an across-the-board cut to everyone’s Social Security benefit happen. Above all, what politicians do best is pursue reelection, and to allow everyone’s benefit to be cut by 20+% would be political suicide. Fact is, the changes needed to restore Social Security to full solvency are already known. What’s missing is the bipartisan cooperation needed to make those changes.
As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized. This can be achieved without tax increases by slight modifications to cost of living adjustments and payments to high income beneficiaries plus gradually increasing the full (but not early) retirement age. AMAC Action, AMAC’s advocacy arm, supports raising the thresholds at which benefits are taxed and then indexing for inflation, and calls for eliminating the reduction in people’s benefits for those choosing to work before full retirement age. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade.