Retirement is supposed to be something you look forward to, a chance to experience new things without career pressures always lurking in the back of your mind. In reality, many Americans view retirement with fear and uncertainty — something that financial experts like Suze Orman are well aware of.
Much of the fear has to do with finances. A study from Allianz Life released earlier this year found that most Americans are more afraid of running out of money in retirement than dying.
Another fear has to do with the future of Social Security, which will lose a major funding source in about a decade when the Old Age and Survivors Insurance (OASI) Trust Fund runs out of money. Once the fund runs dry, Social Security will have to rely solely on payroll taxes — and those cover only about 77% of current retirement benefits.
Orman addressed the Social Security fears in an Oct. 2 LinkedIn post as part of her weekly “Money Monday with Suze” newsletter. In that post, Orman cited a recent survey showing that only 10% of Americans have made plans to receive the biggest possible Social Security payout. That’s the case even though the vast majority of respondents know that waiting as long as possible to file for Social Security — ideally, until age 70 — will ensure the biggest monthly payment.
“What seems to be gnawing most at near-retirees is a fear that the Social Security program is going to run out of money and stop making payments,” Orman wrote.
She addressed that and other fears in her “Monday Morning with Suze” post. Here are five facts she shared to take the fear out of retirement.
1. No, Social Security Will Not Run Out of Money
Even when the OASI fund is depleted, “payments would not stop completely,” Orman wrote. The worst-case scenario is that earned benefits would need to be cut by about 25%.
“Now I am not suggesting a payout of just 75% is acceptable, but 75% is a lot more than zero,” Orman wrote. “So let’s keep that in mind.
2. A Higher Retirement Age Is Not as Scary as it Sounds
There has been a lot of talk about raising the full retirement age to address Social Security’s funding problems. The current age is 66 or 67, depending on your birth year. Among those who support raising the retirement age are 2024 Republican presidential candidates Nikki Haley, Chris Christie and Ron DeSantis — but only for younger Americans and not near-retirees.
Orman noted that the same thing was done 40 years ago, when the full retirement age was raised to 67 from 65.
“But that change was only made for people who were younger than 43 at the time,” she wrote. “The new rule didn’t apply to people in their late 40s, 50s or 60s. There is no reason to expect that the needed changes this go-around would hit near-retirees.”
3. You Can Boost Your Check by Waiting
If you’re in good physical health and expect to live a long time in retirement, there’s “no better financial move to consider than waiting as long as possible to claim your Social Security benefit,” Orman wrote. “A Social Security payout that will be 76% higher if you wait until age 70 to start can be awfully helpful if you indeed have a longer life.”
4. But You Don’t Have To Wait Until 70
As Orman pointed out, deciding when to claim Social Security is not a strict “age 62 or age 70” decision. Although 62 is the earliest you can claim and 70 is the age you can get the highest payment, you can always settle for something in between if you think you need the benefit sooner rather than later.
“The key takeaway I want you to understand is that every month you wait will pay off,” Orman wrote. “If waiting until 70 seems too daunting, why not reframe this as an annual choice? At 62 choose to wait. Then ask yourself at 63 if you want to wait until 64. Keep doing this, and you may find it much easier to see how you can afford to wait another year and another year.”
5. Married Couples Can Strategize To Maximize Benefits
One thing Orman strongly recommends is that a couple’s highest earner delay filing for Social Security as long as possible.
“For married couples, it’s so important to realize that when one spouse dies, the surviving spouse is only entitled to one benefit: her own, or the benefit of the deceased spouse,” Orman wrote. “At a minimum, I would strongly encourage married couples to consider a strategy that allows the highest earner to wait to start Social Security until age 70. That ensures that the surviving spouse will have the largest possible benefit. It’s less important when the other spouse chooses to start payment.”
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