Close to 70 million Americans receive benefit checks from the Social Security Administration (SSA) each month and this figure is likely to grow with each passing year as new cohorts of workers reach retirement age.
Recently, as a result of the changes taking place within the agency such as cutbacks and rumors of potential delays with payments, many individuals have begun to fear that their retirement benefits will be reduced. Due to these growing concerns, a record number of Americans are now filing for their Social Security benefits.
Here is what to know.
Number of Social Security filings surges
The Social Security Administration is currently faced with a crisis regarding funding. It is projected that funding will be depleted in as soon as the next decade and as a result, the agency will no longer be able to make full payments to beneficiaries. Subsequently, Americans are wasting no time by filing early so that they can receive as much money as possible now since there is a chance that funds run out. SSA data from May has revealed that “the total number of people claiming Social Security surged 17 percent to 1.8 million this year.”
Millions upon millions of retirees and disabled individuals are dependent on Social Security checks to cover their expenses each month. The SSA, however, does not have the capacity to deal with the vast amount of baby boomers who are reaching retirement and entering the system. This is because the retiring population is growing significantly faster than the working population.
“For 2025, new Social Security filings are set to reach 4 million, marking a substantial uptick of 15 percent from the year before,” as per findings from the Urban Institute.
President Donald Trump and his administration have been conducting a series of changes at the Social Security Administration. Amongst these changes has been the decision to downsize the agency workforce by cutting 7,000 jobs. Consequently, a number of the claims — particularly the claims from those who decided to file prior to reaching their full retirement age — have stemmed from concerns raised by the actions of the Trump Administration.
“The fear is real and it’s understandable, especially when there’s no serious legislation in place to shore up the system. It feels like spending is on autopilot, with no clear plan to stabilize one of the most important safety nets in the country,” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, said to Newsweek.
Should retirees be worried?
One concern raised regarding the downsizing of the SSA staff has been whether or not a smaller employee base will be able to manage the cases of a growing number beneficiaries without making any serious errors.
Trump has promised that Social Security payments will be upheld, however, many people are of the opinion that benefits will soon face a decrease due to the agency’s financial crisis. Thompson, however, is urging retirees and those approaching retirement to remain calm.
“There’s no reason for panic in the short term,” Thompson asserted. “Social Security is projected to pay 100 percent of benefits for at least the next decade. After that, if nothing changes, benefits will drop by about 21 percent, lasting out to around 2090.”
Social Security can be claimed from age 62, however the full retirement age at which you can receive full benefits is 67. As such, by claiming early, you will earn 30% less. Conversely, by holding off beyond your full retirement age, your monthly benefits can be increased by 24%.
According to predictions by analysts, the SSA will no longer have enough money for full payments by 2035 if no changes are made now. In the event of this, benefits will face a roughly 20% cut. Additionally, the funding gap will be reached faster due the Social Security Fairness Act which increased benefits for a cohort of public sector workers who previously had their benefits reduced or eliminated.
“Seniors or those nearing their golden years are starting to get a bit apprehensive about would they have enough to make it through retirement,” Nadia Vanderhall, financial planner at The Brands and Bands Strategy Group, previously said to Newsweek. “Even though people can be within retirement for over 30 years, Americans are living longer while things are becoming more expensive.”