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WASHINGTON – Social security and retirement go together like peanut butter and jelly – many people can not have one without the other.
Yet when it comes to social security, there is a mountain of anxiety about how it takes into account retirement plans, especially for the millions of people who depend on them as their only source of income.
Politically, social security is often vilified as a rights program that costs taxpayers too much. And there are worries about the risk of running out of money.
Let's take a look at this last point. According to the annual report of the trustees, Social Security has big funding problems. During 83 years of the program's history, Social Security has raised about $ 20.9 billion and paid $ 18 trillion. But the reserves of the Old Age and Survivors Trust Fund, which pays pension and survivor benefits, will not be able to pay all benefits by 2034, according to the report. The Disability Insurance Trust Fund, which pays disability benefits, will no longer be able to pay all benefits by 2032.
"The total cost of social security should exceed its total income [including interest] in 2018 for the first time since 1982, "says the report.
But even with this terrible warning, the program would still have enough tax revenue to pay 77 percent of the benefits provided for the Old Age and Survivors Insurance Trust in 2034. And there will be enough funds to cover 96 percent benefits provided benefits for the Trust Fund for Persons with Disabilities when its reserves will be exhausted by 2032.
So, despite its funding problems, the social security program is not going anywhere, and that means you need to know how to collect your benefits. To help you navigate this complicated and often confusing program, I recommend this month's Silver Color Club "Social Security: Inner History," by Andy Landis (CreateSpace, 19 , $ 95). Make sure you get the money-birthday edition.
Landis is a guru of all things social security. He spent 12 years working for the agency, 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 just a retirement program," writes Landis. "But social security has always been much more than that: today, there is a comprehensive program of benefits for workers, covering not only the worker but also family members. . "
Each chapter begins with a succinct summary, which is a useful guide if you want to move on to the topics that interest you most. I jumped straight to the section on "The delay strategy".
My husband and I talked a lot about when to start collecting our benefits. He wants to start at age 62, even though he is fully aware that his benefits will be reduced. He argues that we can use the money to travel while we are still healthy. I plead to postpone to 70 years. We both reach the age of retirement at 67 years old. (Here is the link to my column on our debate to know if it should be taken early or wait: wapo.st/2LrCc4f.)
"Simply, later you ask for retirement payments, up to age 70, plus they will be for the rest of your life," writes Landis. "If you live at least up to the average life expectancy, you will get a higher total payment, and the higher payments could continue even longer, for your spouse after your death, a gift that continues to last for two lives.
Of course, when you start collecting is an individual decision, and no course of action applies to everyone.
It is 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 go bankrupt before I retire?" He says the answer is no.
"The solvency of social security is a remarkable achievement in this era of troubled banks, large insurance companies in bankruptcy and bankruptcy pension plans," he says. "Social security is one of the strongest financial systems in the world and in the world, Americans can be proud of this success."
Landis also reminds readers that this program is an insurance and not an investment. He makes this point in a discussion about fixes to financially support the program.
Despite the density of the subject, this book is a very easy read. And this is not just for people approaching retirement. You need this knowledge well before you are ready to receive benefits. The more you know, the better you can plan.
I'm organizing an online discussion on "Social Security: The Inside Story" at 11 am on June 28 at washingtonpost.com/discussions. Landis, who retired at 66 this year, has agreed to join me in answering your questions.
Michelle Singletary writes a personal finance column for the Washington Post. Her email address is [email protected].
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