Dear Rusty: I am 56 and hope to hold out to get maximum Social Security at age 70. However, with all of the talk of Social Security funds being depleted, is it wise to continue with this mindset? Will there even be Social Security benefits for folks in my age bracket? Should I think about starting Social Security benefits as soon as I am eligible? I am employed; however, I don’t have a large amount of savings. I contribute to my company’s 401(k) and receive the match, and I own my own home (almost paid off) with an estimated $250,000 in equity, but I won’t be able to stay in the home long term. Any insight you can provide would be greatly appreciated.

Signed: Weary Worker

Dear Weary Worker: I don’t suggest changing your strategy due to fears of Social Security not being there — it will be. Although the program is facing some future financial issues, the very worst that could happen is that everyone’s benefits might be cut by 20 percent-plus if Congress fails to act to restore the program to solvency before the Trust Funds are depleted in the early to mid-2030s. In my opinion, Congress will not likely fail to act because to do so would be political suicide. The fact is, members of Congress already know how to fix Social Security’s financial issues; they just lack the bipartisan spirit and political fortitude to do so until they extract every possible ounce of political capital from the issue. So, it’s largely a matter of how long Congress will wait to reform the program. 

Right now, the Social Security Trust Funds hold about $2.8 trillion in reserves to ensure full benefits will be paid. But Social Security now pays out more in benefits than it receives in revenue, so the extra money needed to pay full benefits is taken from those reserves. What is needed is reform that addresses the reality that people today are living much longer and collecting benefits for much longer than the program is structured to accommodate. Many possible solutions are on the table in Congress, including raising the full retirement age a bit to deal with the reality of people living much longer, and increasing the program’s tax revenue by withholding a bit more from American workers. The eventual reform will likely include some variation of both, as well as other “tweaks,” which further guarantee the program will be there for future generations. 

As for the thought of claiming your benefits as soon as you are eligible (age 62), be aware that Social Security has an “earnings test,” which applies to anyone who collects benefits before reaching full retirement age (FRA). If you are working full time when you first become age-eligible, you likely wouldn’t be able to collect benefits because your benefit amount would be insufficient to pay the penalty for exceeding the earnings limit ($1 for every $2 over the limit) within one year. And, as you may already know, your age 62 benefit would be cut by about 30 percent from your FRA amount, while your benefit at age 70 would be about 76 percent more than your age 62 benefit. 

So even if the worst-case scenario happens (which it almost certainly won’t), an across-the-board cut of 20 percent-plus to your age 70 benefit would yield a higher monthly payment than that same cut to your age 62 benefit amount. So, I suggest you stick with your current strategy to continue working and wait as long as practical to claim your benefits (up to age 70). As an aside, AMAC (Association of Mature American Citizens) has, for years, been proposing (to Congress) its “Social Security Guarantee Plus,” which would restore Social Security to solvency for generations to come and would not require an increased payroll-tax rate. Congressional reaction has been generally positive, leading us to be hopeful for a reasonable solution to the problem.        

Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.