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How Secure is Social Security?

Like most kids, my grandchildren Posey and Hudson love Christmas. Here is a picture of them last year after we decorated our tree at home.

 My guess is that Posey, Hudson, and my other four grandkids will not be thinking about their future Social Security benefits when Christmas rolls around this year, which is good for them, because their thoughts would not be merry.  The latest projections from the folks who run the Social Security trust fund suggest that the benefits scheduled under current law can be paid in full to recipients only until 2034. Their numbers also show that Social Security expenses are estimated to exceed income by at least 20% over the next 75 years. Yikes!

 Despite the awful news, Social Security is still one of the primary sources of income for many Americans, and it defies imagination that our leaders in Washington, DC, will not do something to fix it. We’ll see. In the meantime, it might help to have some basic information about how this important program works (under current law). The following information1 is not complete and it helps to work with a financial planner (like me) to figure out the details. But, here are some basics to get you started:

• Benefits are first payable to a retired worker at the age of 62, but those benefits will be permanently reduced, unless you wait until your…

• …Full Retirement Age (FRA), at which you will collect your full benefit. For example, for folks born between 1943 and 1954, your FRA is 66.

• Workers who wait to claim until after FRA will receive a Delayed Retirement Credit added to their benefit. A worker may delay benefits until age 70. For those born in 1943 or later, the DRA is 8% per year.

• In general, to qualify for benefits, you need 40 Earnings Credits, i.e., you must work 10 years and pay Social Security taxes during that time. In 2023, a worker earns one credit for each $1,640.00 of covered earnings, up to a maximum of four credits per year. Even if your job is part-time or doesn’t pay a lot, the earnings still count, and that’s a good deal for you.

• The calculation has some nuances and adjustments, but, basically, your initial monthly benefit is calculated on your highest 35 years of earnings. If you have fewer than 35 years of earnings, the years with no earnings are entered as zeroes in the calculation, which results in a lower monthly benefit.

• A widow or widower who is at least 60 years of age can receive the deceased worker’s Social Security benefit. The amount depends on several factors, such as whether the worker was receiving a reduced benefit. In addition, benefits are payable to a young widow or widower who is still caring for a deceased worker’s children who are under the age of 16, or who are disabled.

• Automatic Cost of Living Adjustments (COLAs) went into effect in 1975 and have been applied to benefits every year since then, except in 2010, 2011, and 2016.

  A lot of Christmases will go by before my grandkids start thinking about Social Security, but you might want to. Despite the possible financial woes of the program, it is a vital part of America’s retirement picture, and it might be part of yours, as well. I can’t begin to guess about how to fix it, but I do know that everyone needs a financial plan. If you don’t have one, call me today.

 Mike Rich, CFP®

Pontchartrain Investment Management

2065 1st Street, Slidell, LA 70458



Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Asset allocation does not ensure a profit or protect against a loss.

Past performance is no guarantee of future results.

Past Articles

January 2019 - Reflection

February 2019 - When Life Gets in the Way

March 2019 - The Only Financial Plan

April 2019 - I Have Had It

May 2019 - Your Money Might Leave

June 2019 - When the Stars Align

July 2019 - Are You Alright

August 2019 - Going For The Green

September 2019 - Grandchildren

October 2019 - Recession

November 2019 - Long Term Care

December 2019 - Experiments

January 2020 - Financial Checklist

February 2020 - Financial Roadmap

July 2020 - Intro to New Clients 

*Note that there is a gap due to Covid 19.

October 2020 - Asset Domain

November 2020 - Liabilities and Taxes

December 2020 - Cash Flow

January 2021 - Financial Checklist

February 2021 - The Salami Smuggler

March 2021 - Do You Want To Be a Financially Successful Person?

April 2021 - Baby Steps

May 2021 - Time Is On Your Side

June 2021 - I Did It!!!

July 2021 - Live for the Present

August 2021 - Family Advice

September 2021 - Clarity

October 2021- Storms Can Be Scary

November 2021 - LTC Insurance

December 2021- Don't Peek

January 2022 - The Secret

February 2022 - Estate Planning

March 2022 - Waste Not

April 2022 - Have your cake and eat it too

May 2022 - What is your money lifeline?

June 2022 - Crystal Ball

July 2022 - Do you have a financial 'road map'

August 2022 - Italy

September 2022 - Risk

October 2022 - Father Knows Best

November 2022 - Why you need me as your Financial Advisor

December 2022 - Eat your Cake

January 2023 - I don't care how you spend your

February 2023 - News Flash!!!! Wealthy People Have More Money

March 2023 - Rewards

April 2023 - Change

May 2023 - Tick Tick Tick

June 2023 - Ruin

July 2023 - Oh How Times Have Changed

August 2023 - Think Inside the Box

September 2023 - What Can you Accomplish

October 2023 - It is what it is

November 2023 - It's Retirement Time