It appears that the Social Security system may run out of funds even faster than projected. While the last Social Security Trustees report indicated that funds would run out by 2035, some think tanks are suggesting that it could be as early as 2029 as a result of an influx of new Social Security claimants and reduced income from fewer people working due to the pandemic. Thus, many advisors are suggesting that it might be beneficial to claim Social Security benefits early.
In this Retirement Daily article, Should You Claim Social Security Early Because of COVID-19?, Covisum® Founder and President, Joe Elsasser, CFP®, outlines why the “claim early because Social Security is running out of money” argument is often dramatically oversimplified, and potentially causes people to claim out of fear rather than a reasoned approach.
"Even projecting this year’s recession as similar in scope to the Great Recession of 2008-2009, I still expect that 69% of benefits will be paid based on the current revenues after 2029. The most recent Social Security Trustee’s report suggested that 79% of benefits would be paid after 2035, without accounting for the pandemic and resulting economic impacts. Regardless of the estimate, it’s a far cry from the fear that Social Security would simply disappear. A more refined argument would be, claim early because benefit cuts are coming.”
The possibility of benefit cuts due to the insolvency of the Social Security system is not enough to suggest that most people should claim benefits early. Read the article to learn how taking a reasoned approach to Social Security claiming, even in the presence of the potential program shortfalls, is a much better choice than claiming early out of fear.