Please ensure Javascript is enabled for purposes of website accessibility

3 Things That Will Make You Feel Better About Social Security

By Maurie Backman – Updated Nov 7, 2018 at 2:44PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It has a lot to offer. Here are a few positives you should know about.

Though Social Security continues to provide crucial retirement benefits to millions of seniors, the program is, to some extent, in trouble. Once its trust funds run out, beneficiaries risk as much as a 21% cut in benefits beginning in 2034. That's bad for the seniors today, who count on that income to stay afloat. It also explains why most working Americans don't think the program will be there for them once they're ready to retire.

However, despite the doom and gloom surrounding Social Security, there's also much to celebrate. Here are three positive points about Social Security to remember the next time you start bemoaning its shortcomings.

Smiling middle-aged man sitting down at table

Image source: Getty Images.

1. The program isn't going broke

Though a potential reduction in benefits is hardly something to celebrate, let's not ignore the bigger picture: Social Security will, by all projections, be around for many, many years to come. The program gets the bulk of its revenue from payroll taxes, so as long as we have a workforce, Social Security will continue to collect money, and recipients will continue to collect benefits in some shape or form.

Furthermore, because of the number of people today who rely on Social Security as their primary source of income, Congress is reasonably invested in avoiding a future benefits cut. And while we don't have a solution to the program's impending shortfall at present, there are many in the works.

2. You have the power to boost your benefits

First, the bad news: Social Security is designed to replace only about 40% of the average worker's pre-retirement income, assuming there is no benefits cut. Since most folks need roughly double that amount to live comfortably in retirement, the end result is that you can't count on Social Security alone to pay your senior living expenses.

The good news: You have the ability to substantially raise your benefits, thereby securing a higher monthly income stream for life. All you need to do is hold off on claiming benefits past your full retirement age, and accrue delayed retirement credits for as long as you can (keeping in mind that these credits stop accruing at age 70).

Let's imagine your full retirement age is 67, at which point you're entitled to a $1,500 monthly benefit, and that you don't file for Social Security until you turn 70. By waiting that long, you'll end up boosting your monthly payments to $1,860, thereby giving yourself an extra $4,320 a year to work with. Best of all, that increase is permanent.

3. You might get benefits even if you never worked a day in your life

To become eligible for Social Security in retirement, you'll need to have accumulated 40 lifetime credits, whose dollar value changes from year to year. In 2018, one credit can be gained per $1,320 of earnings. Next year, the value of a single credit will be $1,360 in earnings. It therefore stands to reason that if you never worked, you won't collect benefits when you're older.

But that's not necessarily true. If you are, or were, married to someone who's eligible for Social Security, you may be entitled to spousal benefits. These are based on your current or former spouse's work record. But in a nutshell, you could end up collecting as much as half of your spouse's benefit at full retirement age. This means that if your spouse's work record translates into a $1,500 monthly benefit, you might get $750 yourself.

When Social Security is in the news, the details are often depressing. But rather than get caught up in that despair, realize that Social Security still has a lot going for it. Not only can it carry on without its trust funds, but it also allows you to actively grow your benefits while covering you even if you never managed to earn any money. And these are all reasons for a positive outlook about Social Security.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
339%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.