Just in time for my annual column on everyone’s favorite benefit, Social Security, the government announced an overhaul of its online portal, SSA.gov.
The change affects millions of people who receive or plan to receive Social Security retirement benefits, as well as younger workers who are interested in using helpful tools to calculate future retirement benefits.
If you created a My Social Security Account online before September 18, 2021, or perhaps you’ve never opened one before, there are certain steps you need to follow. If you go to www.ssa.gov/myaccount, you have two options:
(1) Login.gov, a government account that gives you access to all government agencies, including the IRS and the VA
or…
(2) ID.me is a commercial company and meets government security standards. If you already have a Login.gov or ID.me account, you do not need to create a new account or do anything else.
The sign-up process is a little cumbersome, but once you’ve set up the account, there are many useful resources available to you. The most obvious is that you can use the portal to apply for benefits. This is an important decision that should be made with care and a little math. To be eligible, you must have worked and paid into the system for at least 10 years, although not continuously.
The age at which you can start receiving benefits depends on your birth date. The full retirement age (FRA) increases gradually if you were born between 1938 and 1960—after that, the age is 67. While you can start claiming as early as 62, this will permanently reduce your benefits by up to 25 percent, which can also affect a nonworking spouse claiming based on the same records.
Additionally, claiming benefits early can negatively impact most income (including wages, bonuses, commissions, and vacation pay — or net income if you’re self-employed, but not pensions, annuities, investment income, interest, veterans’ benefits, or other state or military retirement benefits). The government will deduct $1 from Social Security benefits for every $2 earned over $22,320 in 2024.
Conversely, if you can afford to wait past your FRA, there’s a big advantage – you’ll qualify for “deferred retirement benefits,” which add up to 8% more per year for each full year you delay, up until age 70. Because Social Security benefits are adjusted for inflation each year, claiming later may actually pay off over time.
Although most people wait until a few months before filing for Social Security benefits before even thinking about Social Security, using the new portal makes sense at any age. If you’re close to retirement, working with the Plan for Retirement tool can demonstrate the benefits of waiting. If there are spouses who both worked, a strategy where one files at the FRA and the other waits might make sense.
If you are younger, the portal can help you understand the long-term impact on Social Security if you choose a different career path that earns you much more or less than you currently do.
Finally, I am often asked whether younger workers should count on Social Security because it is “broken.” The answer is YES, you should count on it. While the system’s surpluses are shrinking, the Trustees Report 2024 says the government will be able to pay the planned benefits until 2033.
At that time, the Fund’s reserves will be depleted and the money flowing into the system (through taxes) will be enough to pay 79% of the planned benefits.
As I have noted many times in this column, I believe Congress will eventually address the problem (with force) through some combination of the following: raising the level of taxes (the so-called “SS wage base,” currently $168,600); raising the current FICA tax rate, which is set by law at 6.2% for both employees and employers and 12.4% for self-employed Americans; or raising the retirement age at which one can claim Social Security benefits.
In other words, a little bit of experimentation here and there should help solve the problem.
Jill Schlesinger, CFP, is an economic analyst for CBS News. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at [email protected]. Visit her website at www.jillonmoney.com.
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