(PatriotWise.com) – In an op-ed from the Daily Wire, “Retirement Watch” editor Bob Carlson outlines what might happen as Social Security approaches its projected date of insolvency.
Carlson notes that some financial advisors have suggested that Baby Boomers should claim Social Security benefits as soon as they become eligible at 62 to ensure that they get their benefits before future cuts are imposed.
However, Carlson writes that it would be better for people to wait to claim their benefits “as long as they can (but no later than age 70),” he argues that “the annual benefit increases by up to 8% for each year claiming is delayed through 70.” He describes this as a “guaranteed, tax-free annual increase.”
Additionally, benefits are increased each year based on the rate of inflation. Carlson explains that there is a “significant benefit to having that inflation index compounded on a higher beginning benefit.”
Carlson also expects when Congress does act to save Social Security, it is likely to include a grandfather clause as it has done in the past that will protect those who already receive Social Security, along with those filing a claim within the next five to ten years.
But if Congress doesn’t include a grandfather clause, Carlson said it is preferable that a cut be imposed on “the higher benefit gained from waiting to claim than the lower benefit paid to those who claim early.”
He also suspects Congress won’t protect the benefits of individuals with higher income and net worth. Instead, these individuals are more likely to be subjected to a combination of lower benefits and higher income taxes.
Carlson writes that Congress may declare that any Social Security shortfall “will be covered by a contribution of general funds from the Treasury Department,” meaning the shortfall would have to be added to the annual budget deficit as well as the federal debt.
However things shake out, Carlson suggests that Americans that are within ten years of retirement shouldn’t change their plans based on “Social Security’s fiscal difficulties.” He writes that most Americans should wait as long as possible to claim Social Security so they can “maximize lifetime benefits.” He also encourages people to “build flexibility in your retirement plan.”
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