13 Aug 2020 Speaking of Social Security

In 1985, I was 13 years old.  That year I earned $484 working at a local tennis club taking care of the clay tennis courts. My job involved sweeping the courts with a wide pull-behind broom, cleaning the line tape with a line broom and watering the courts with a built in sprinkler system. Occasionally I’d use a small steamroller to pack the courts down after weeks of play.

For the record, this will be the first time this story has been told.  One day in particular, I wanted to be skateboarding with my buddies rather than working at the tennis club. In my haste to be free, I attempted to steamroll the courts too soon after watering them. With the courts still damp, I drove the roller about 5 feet before I realized that the clay from the court, about 3 inches deep, was sticking to and rolling up the back roller, kind of like when you’re trying to roll out pizza dough with a rolling pin. The result was a gaping 3’ by 5’ rectangular pit in the service area. I thought I’d ruined the court! In a near panic, I backed the steamroller up and spent the rest of the evening repairing the damage.

I was reminded of that story recently when I downloaded a copy of my Social Security statement. The first part of the statement told me how much I can expect to receive from Social Security when I reach ages 62, 67 and 70. The second part listed each year that I’ve earned income and how much.

I found reviewing my Social Security statement to be an enjoyable exercise. It’s funny how seeing my earnings in certain years reminded me of different important life events. I earned $26,000 in 1996, my first full year as a financial advisor, and even less 14 years later when I left the “comfort” of a big financial firm to set out as an independent advisor!

Yes, reviewing your Social Security statement can be a fun exercise but it’s also an important thing to do. Doing so ensures that all your earnings have been reported and recorded correctly. It also enables you to use the estimates of your future benefits to update your financial plan.

If it’s been a while since you’ve reviewed your statement, I highly encourage you to do so. It’s quick and it can be fun. In addition, you can pass it along to us at Beacon so we can update your financial plan. If you’re closer to retirement, we can input your information into our Social Security planning software to help determine your (and your spouse’s, if you’re married) ideal scenario for claiming your Social Security benefits based on your unique age(s), income needs, etc.

With that said, if you’re interested in accessing information about your future or current Social Security benefits you can click here.  You’ll be asked to set up an account if you haven’t already done so. I found the Social Security site to be very useful. You can review your recent statement, see your current benefits (if you are already claiming), get an idea of your potential benefits and review your earnings history. I haven’t had an actual Social Security card for years and I was able to order one in about two minutes on the site.

It is true that the health of Social Security has been in the news over the past few years and more recently as experts have wondered how or if the COVID-19 crisis will impact its sustainability. The short answer is we don’t know. What we do know is that in their April 2020 annual report and outlook, the trustees for Social Security estimated that the program will be able to pay full benefits through 2034. After that, it should be able to pay about 76% of scheduled benefits unless Congress acts to restore the program’s finances.

There’s already been some conversation about how to alleviate the 2034 shortfall. Ideas on the table include raising the “full” retirement age, increasing the taxability of benefits, increasing the payroll tax and means testing the benefits. One can only assume that these ideas would also potentially be used to repair any damage done by the COVID-19 crisis.

Even if some of the changes being entertained become reality, it’s likely that Social Security will continue to be one of the best ways to generate retirement income. It’s guaranteed for life, adjusted for inflation and not correlated with the stock market. Therefore, I believe it makes sense to pay attention to it and ensure that you use it well.

Social Security is an important part of your financial picture. As always, please let us know if we can help with it or any other financial topics that are on your mind.