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Social Security is constantly changing with updates to tax maximums, cost-of-living adjustments (COLAs), exemptions, and more. Some worry that increased payouts could deplete the program by the time today’s 30- and 40-somethings retire.
The good news is that Social Security is more resilient than it seems. As long as payroll taxes are collected, funds will remain, though the question is how much will be left. Without changes, Social Security will pay out more than it takes in, with a projected shortfall by 2035. However, this doesn’t mean checks will stop; they’ll just be smaller.
The most common advice from financial planners is to save for retirement as if Social Security doesn’t exist, though this isn’t feasible for everyone who views it as part of their retirement plan. So, what can you do now to maximize your benefits?
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Max your earnings
Make more money — it’s a no-brainer, right?
Maximizing your income is key to boosting your Social Security benefits, as they’re based on your highest 35 years of indexed earnings. Higher earnings, especially during peak years, directly impact your retirement check. Advocate for raises, add extra income streams and track your SSA statement annually to ensure accuracy and replace lower-earning years.
Increasing your earnings and lowering your expenses are key steps in building a solid retirement plan. But navigating the complexities of your financial situation can be overwhelming, especially if you’re unsure how to optimize your income for the future.
That’s where a professional can help.With Advisor.com, you can find the best advisor for your needs — both in terms of what they can offer your finances, and what they’ll charge to work for you.
Advisor.com is a free service that helps you find a financial advisor who can co-create a plan to reach your financial goals. By matching you with a curated list of the best options for you from their database of thousands, you get a pre-screened financial advisor you can trust.
You can then set up a free, no obligation consultation to see if they’re the right fit for you.
Delay gratification
Maximizing your Social Security benefits often means delaying them as long as possible. If you’re in your 30s or 40s, focus on creating a financial plan that reduces your reliance on Social Security in the early years of retirement.
For instance, having substantial cash reserves beyond your emergency fund can allow you to cover expenses without tapping into Social Security right away. This provides flexibility and ensures your benefits grow to their maximum potential.
If you’re willing to park your money for at least a year, you can get a rate of return over ten times higher than a typical high-yield savings account with a certificate of deposit (CD). A CD locks in your funds for a set period, providing stability and guaranteed returns, which the stock market cannot promise.
SavingsAccounts.com can help you shop around across various banks and financial institutions. The platform allows users to easily compare different CD terms, interest rates, and features to find the best options for their savings goals.
They aim to simplify the process of choosing the right CD by providing transparent and up-to-date information, helping you maximize your return while locking in financial security.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Find the right account for your needs
Taxable brokerage accounts are an excellent resource for early retirement withdrawals, though they are less tax-efficient due to capital gains and dividend taxes. Tapping into these accounts can bridge the gap between leaving the workforce and accessing other retirement funds, helping you preserve tax-advantaged accounts like 401(k)s and IRAs for later use.
While you can claim Social Security as early as 62, waiting until your full retirement age (around 67 for most people) or even until age 70 can significantly increase your monthly benefit. Each year you delay past your full retirement age adds about 8% to your payments.
For those retiring before 70, relying on other resources like a 401(k) or IRA can help cover living expenses while your Social Security benefits grow.
For retirees seeking stability and diversification, a gold IRA offers a way to invest directly in precious metals.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
