Wor­ried about the fi­nan­cial fu­ture of So­cial Se­cu­rity?

Au­thor Andy Lan­dis ex­plains how to nav­i­gate this re­tire­ment pro­gram

The Mercury (Pottstown, PA) - - BUSINESS - Michelle Sin­gle­tary The Color Of Money

plans, es­pe­cially for the mil­lions of peo­ple who de­pend on it as their only source of in­come.

Po­lit­i­cally, So­cial Se­cu­rity is of­ten vil­i­fied as an en­ti­tle­ment pro­gram that costs tax­pay­ers too much. And there’s con­cern that it’s in dan­ger of run­ning out of money.

Let’s take a look at that last point. So­cial Se­cu­rity does have some big fund­ing is­sues, ac­cord­ing to the just-re­leased an­nual trus­tees re­port. Over the pro­gram’s 83-year his­tory, So­cial Se­cu­rity has col­lected about $20.9 tril­lion and paid out $18 tril­lion. But the re­serves for the Old-Age and Sur­vivors In­sur­ance Trust Fund, which pays re­tire­ment and sur­vivor ben­e­fits, will be un­able to pay full ben­e­fits in 2034, ac­cord­ing to the re­port. The Dis­abil­ity In­sur­ance Trust Fund, which pays dis­abil­ity ben­e­fits, will no longer be able to pay full ben­e­fits in 2032.

“So­cial Se­cu­rity’s to­tal cost is pro­jected to ex­ceed its to­tal in­come [in­clud­ing in­ter­est] in 2018 for the first time since 1982,” the re­port said.

But even with this dire warn­ing, the pro­gram would still have enough con­tin­u­ing tax in­come to pay out 77 per­cent of sched­uled ben­e­fits for the OldAge and Sur­vivors In­sur­ance Trust Fund in 2034. And there will be enough com­ing in to cover 96 per­cent of sched­uled ben­e­fits for the Dis­abil­ity Trust Fund when its re­serves are de­pleted in 2032.

So, de­spite its fund­ing is­sues, the So­cial Se­cu­rity pro­gram isn’t go­ing anywhere, and that means you need to know how best to col­lect your ben­e­fits. To help you nav­i­gate this com­pli­cated and of­ten con­fus­ing pro­gram, I’m rec­om­mend­ing for this month’s Color of Money Book Club “So­cial Se­cu­rity: The In­side Story,” by Andy Lan­dis (CreateS­pace, $19.95). Be sure to get the sil­ver an­niver­sary edi­tion.

Lan­dis is a guru of all things So­cial Se­cu­rity. He spent 12 years work­ing for the agency, and then he put his in­sider knowl­edge to work for him­self by help­ing in­di­vid­u­als and pro­fes­sion­als un­der­stand the labyrinthine pro­gram.

“Many peo­ple be­lieve that So­cial Se­cu­rity is merely a re­tire­ment pro­gram,” Lan­dis writes. “But So­cial Se­cu­rity has al­ways been much more than that. To­day it is a com­pre­hen­sive pro­gram of worker ben­e­fits, cov­er­ing not only the worker but also fam­ily mem­bers.”

Each chap­ter starts with a nut­shell sum­mary, which is a useful guide if you want to skip around to top­ics that in­ter­est you the

most. I jumped straight to the sec­tion on “The De­lay Strat­egy.”

My hus­band and I have been talk­ing a lot about when to start col­lect­ing our ben­e­fits. He wants to start at 62, even though he’s fully aware his ben­e­fits will be re­duced. He ar­gues we can use the money to travel while we’re still healthy. I’ve been ar­gu­ing to de­lay to 70. We both reach full re­tire­ment age at 67.

“Quite sim­ply, the later you ap­ply for re­tire­ment pay­ments, up to age 70, the higher they’ll be for the rest of your life,” Lan­dis

writes. “You’ll get a higher to­tal pay­out if you live at least to the av­er­age life ex­pectancy. And the higher pay­ments might con­tinue even longer, for your spouse af­ter you pass away. It’s a gift that keeps on giv­ing, for two life­times.”

Of course, when you start col­lect­ing is an in­di­vid­ual de­ci­sion, and no set course of ac­tion ap­plies to every­one.

It’s not un­til chap­ter 11 that Lan­dis fully ad­dresses the sol­vency of So­cial Se­cu­rity. He an­swers the ques­tion I get all the time from young adults. “Will

So­cial Se­cu­rity be bank­rupt be­fore I re­tire?” He says the an­swer is no.

“So­cial Se­cu­rity’s sol­vency is a re­mark­able ac­com­plish­ment in this era of troubled banks, large in­sur­ance com­pa­nies in re­ceiver­ship, and pen­sion plans in bankruptcy,” he says. “So­cial Se­cu­rity is one of the sound­est fi­nan­cial sys­tems in the na­tion and the world. Amer­i­cans can take pride in this achieve­ment.”

Lan­dis also re­minds read­ers that this pro­gram is in­sur­ance, not an in­vest­ment. He makes this point in a dis­cus­sion about fixes to fi­nan­cially shore up the


De­spite the dense­ness of the topic, this book is a very easy read. And it’s not just for folks near­ing re­tire­ment. You need this knowl­edge long be­fore you’re ready to col­lect ben­e­fits. The more you know, the bet­ter you can plan.

I’m host­ing an on­line dis­cus­sion about “So­cial Se­cu­rity: The In­side Story” at noon Eastern time on June 28 at wash­ing­ton­post.com/dis­cus­sions. Lan­dis, who re­tired this year at 66, has agreed to join me to take your ques­tions.

Read­ers can write to

Michelle Sin­gle­tary c/o The Wash­ing­ton Post, 1301 K St., N.W., Wash­ing­ton, D.C. 20071. Her email ad­dress is michelle. sin­gle­tary@wash­post.com. Fol­low her on Twit­ter (@Sin­gle­taryM) or Face­book (www.face­book.com/MichelleSin­gle­tary). Com­ments and ques­tions are wel­come, but due to the vol­ume of mail, per­sonal re­sponses may not be pos­si­ble. Please also note com­ments or ques­tions may be used in a fu­ture col­umn, with the writer’s name, un­less a spe­cific re­quest to do other­wise is in­di­cated.

WASH­ING­TON, D.C. » So­cial Se­cu­rity and re­tire­ment go to­gether like peanut but­ter and jelly — many peo­ple just can’t have one with­out the other.

Yet when it comes to So­cial Se­cu­rity, there is a moun­tain of anx­i­ety about how it fac­tors into re­tire­ment

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