I know I will get Social Security when I retire. Here’s Why I Leave It Out Of My Plans | The Motley Fool

Retirement is still a few decades away for me, but planning for it has been a priority in my life since I started working. I have done my best to save actively and choose the right accounts for my money. I have thought about when I would like to retire and how much I will spend when I get there.

One thing I haven’t included in my plan so far is Social Security. It’s not because I don’t think I’ll get any benefits — I know I will — but right now, trying to plan for it feels like more trouble than it’s worth.

Why don’t I plan for my future Social Security benefits?

I have about 29 years before I can claim Social Security retirement benefits, and that’s if I sign up at 62. I plan to delay my checks until 70 in hopes of increasing lifetime benefits. mine. So I have over 37 years until I am ready to apply.

A lot can happen in that time, and there’s a strong possibility that Social Security will look different then. The trust fund for the program is expected to expire in 2034, according to the latest Congressional Budget Office (CBO) report. That could lead to reduced benefits if the government can’t find a way to increase Social Security funding over the long term.

We don’t know what a solution to this problem solving problem might look like or when it might go into effect. Other proposed reforms include raising taxes on workers, which could affect their ability to save for retirement in the future. Others include reducing direct benefits or taking measures, such as cost-of-living reductions (COLAs) or raising the full retirement age (FRA), which can act as indirect cuts. directly to beneficiaries.

Because of all this uncertainty, there is no way for me to estimate what my future benefits will be with any accuracy now. I also don’t know if the increase in Social Security income taxes will affect my ability to save for retirement in the future. So I save as much as I can now. I hope to cover most of my retirement expenses on my own, so whatever happens with Social Security won’t affect me too much.

We are looking ahead to 2034 and beyond

Once we have a better idea of ​​what Social Security will look like a few decades from now, I’ll probably start factoring its benefits into my retirement plan. If it turns out that I’m contributing more than needed to my retirement accounts after accounting for Social Security, I can decide to retire early, reducing my savings rate. now, or building a bigger nest egg for retirement.

But I understand this approach isn’t ideal, especially for those who can’t always save for retirement on their own. In this case, it’s best to use current Social Security estimates as a jumping off point when calculating your future checks.

The best way to do this is by setting up my Social Security account. You will need to answer some authentication questions the first time you set this up to prove you are you. After that, you can create a username and password for future logins.

There is a tool in your account that shows you an estimated monthly income for all ages between 62 and 70, based on your earnings history to date and future earnings projections . You can change these future predictions if you like. Check out the reporting ages you’re considering, or choose a few if you’re not sure which one to choose. See how much you’ll get from the program based on your current Social Security benefits form.

If you want to be more conservative, you can change these estimates in order to reduce the benefits. The CBO report says that, if the government does nothing to increase funding, the Social Security Administration will have to cut benefits by 23% starting in 2035. Benefits will decrease by 5% again in 2098.

This is the worst case scenario under current law, so if you plan for this outcome, you probably don’t have to worry about any surprises. That said, you may need to save more money than you originally intended. If that’s not an option, you may have to rethink your retirement. And you’ll definitely want to update your plan once we have a clearer idea of ​​what Social Security will look like in the future.