As we continue to navigate through uncertain times, retirement planning is more important than ever. For those who will soon be relying on their Social Security benefits(1) to make ends meet, understanding how the current market affects their income may be critical to their financial future. 

In this article, we will explore the current state of Social Security and provide strategies to help you maximize your retirement income.

Social Security alone may not be enough 

While Social Security benefits are a significant source of income for retirees, they may not be sufficient to cover all expenses. In fact, the average Social Security benefit(2) for retirees in 2023 is just $1,840 per month. When social security was designed, it was supposed to merely be a supplemental piece of retirement income, and not the entire piece. This means retirees often need additional sources of income, such as a retirement account or pension plan, to ensure they can cover all their expenses in retirement.

The trust fund is projected to run out of money

The Social Security trust fund is projected to run out of money by 2035, according to the Social Security Board of Trustees. This means that without any changes to the program, Social Security benefits could be reduced by up to 24%. However, it’s important to note that Social Security is still projected to be able to pay out approximately 76% of its benefits even if the trust fund runs dry and no changes are made to the system..

The full retirement age is increasing

For those born 1960 or later, the full retirement age (the age at which you can receive full Social Security benefits) is 67. This means that if you were born in 1960 or later, you’ll have to wait until age 67 to receive your full benefit.

The COLA is small but important

Each year, Social Security beneficiaries receive a cost-of-living adjustment (COLA) based on inflation. For 2024, the COLA is 3.2%, which may not seem like much. However, for retirees on a fixed income, this increase can make a big difference in their ability to afford everyday expenses.

Taxes may impact your benefits

Depending on your other income, you may be required to pay taxes on up to 85% of your Social Security benefits. This means that while Social Security benefits are not subject to federal income tax for everyone, those with higher incomes may see a significant portion of their benefits taxed.

There are strategies to maximize your benefits

There are a variety of strategies that individuals can use to maximize their Social Security benefits, such as delaying claiming until age 70 or coordinating benefits with a spouse. 

Additionally, working with a financial advisor can help retirees navigate the complex world of Social Security and ensure they are making informed decisions about their retirement income.

Work with us

At Brogan Financial, we pursue excellence in the delivery of wealth management and comprehensive retirement planning. 

Contact us today and let us help you achieve your life goals for retirement & beyond.