President Trump has now taken office and is wasting no time making changes. So far, he hasn't made good on his promise to eliminate Social Security benefit taxes, but his term has only just begun. Some seniors are eager to see this tax eliminated so they can have more spending money today. But others are worried about how this move would affect the program's worrying shortfall.
There isn't a lot ordinary Americans can do to change Social Security policy. But there are four things you can do right now to increase your financial security so you're better prepared for whatever happens to the program down the line.
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1. Save as much as you're able to on your own
Workers who aren't yet claiming Social Security should save as much money as they can for their retirement. This isn't always easy, but it's worth doing even if you can only spare a few dollars per month.
You may have to give the IRS a cut for taxes in retirement, but the bulk of your savings is yours to spend how you wish. A larger nest egg will give you a better chance of remaining financially secure throughout retirement even if Social Security experiences cuts in the future.
2. Choose your claiming age carefully
You become eligible for Social Security at 62, but you must wait until your full retirement age (FRA) if you want to claim the full benefit you've earned based on your work history. Your FRA depends on your birth year, and it's 66 to 67 for today's workers.
Claiming early shrinks your monthly checks by up to 30% while delaying benefits grows your checks until age 70. But that doesn't mean waiting is always your best move. If you have a short life expectancy or lack adequate personal savings, signing up early could be the wiser choice. However, if neither of those apply to you, you may get a larger lifetime benefit by waiting to apply.
It helps to have a claiming age in mind, even if you're not yet eligible for Social Security. Create a my Social Security account to get access to a tool that estimates your benefit at every possible claiming age. Once you have an idea of how much your Social Security checks will be, you can figure out how much money you'll need from other sources to cover your retirement living expenses.
3. Consider working part-time in retirement
Those who don't think they'll be able to save enough may want to consider working part-time throughout retirement. This will give you access to a steady paycheck to supplement your personal savings and Social Security benefits.
If this idea doesn't appeal to you, consider a phased retirement instead. This is where you slowly reduce your hours in the workforce over time until you retire completely. You'll have to work a little longer than you originally planned, but you'll also reduce the length and cost of your retirement by doing this.
4. Apply for other government benefits
Those who are unable to work in retirement may be eligible for other government benefits, depending on their income. Supplemental Security Income (SSI) is for the blind and disabled as well as low-income seniors. It provides a monthly check worth up to $967 per month for a qualifying individual or $1,450 per month for a qualifying couple.
You may also qualify for Medicaid to help with healthcare expenses or Supplemental Nutrition Assistance Program (SNAP) benefits. Each program has its own set of requirements, though, so make sure you understand these before you apply.
Some of these changes may not be necessary for you, and that's OK. But since the future of Social Security is uncertain, it doesn't hurt to keep them in mind. If you find you're having trouble making ends meet in retirement, you can revisit some of these strategies then.
