When it comes to Social Security, the sky is not falling.
Yes, there’s a projected shortfall, but however the system is fixed — and it will have to be — Social Security will likely remain a vital part of most Americans’ retirement.
“Eighty-one years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nation’s most successful, effective and popular programs,” the Center on Budget and Policy Priorities wrote recently.
But despite Social Security being a key benefit for millions of Americans, many people don’t understand how the system works. They are worried it won’t be around long enough for them to collect benefits. And some make mistakes that can cost them money.
You labor so hard paying into the system that it’s important you learn what you are entitled to collect. So for this month’s Color of Money Book Club I’ve selected “Making Social Security Work For You: Advice, Strategies, and Timelines That Can Maximize Your Benefits” (Adams Media, $17.99) by Emily Guy Birken.
Guy Birken is a personal finance blogger. She brings her breezy blogging style to help explain a system that can be mind numbing.
“Navigating the complex Social Security system and its labyrinth of obscure rules to get the most from its benefits is beyond both the patience and skills of the average senior,” she writes. “As a result, many Americans who rely on Social Security as their chief source of income receive an amount that is smaller than it should be.”
I love the way the book is organized, and also that there is a takeaway summary after each chapter. Guy Birken first walks you through what Social Security is and isn’t. It is important to understand that social security at its core is insurance.
“Like private insurance, social insurance helps spread out the risk of an individual loss among a larger group, thereby protecting the most vulnerable in society,” she writes.
From the genesis of the system Guy Birken jumps to its present problem. Total income in the system is projected to exceed its total cost through 2019. In its latest report, the Social Security Board of Trustees said reserves for the combined trust funds — Old Age and Survivors Insurance and Disability Insurance — will be depleted in 2034. If there are no changes to address the shortfall, there will only be enough income to cover 79 percent of scheduled benefits.
It’s that prediction that puts people in a panic. But Guy Birken argues that the system’s vulnerabilities are exaggerated. She also provides possible solutions to cover the shortfall, which admittedly won’t go over well with a lot of folks. She also discusses such ideas as raising Social Security payroll taxes, reducing benefits, or increasing the full retirement age — again.
Don’t shout at me. Something’s got to give.
Past the history and current events lessons is the meat of the book: The nuts and bolts of claiming your benefits. Here are some of the topics she covers:
• The pros and cons of taking early benefits.
• Figuring out how you can afford to delay to maximize your benefits.
• Understanding benefits for single individuals, married couples, divorcees and survivors.
The final chapter in the book provides a handy Top 10 list of Social Security pitfalls and problems.
This is a guide you’ll want to have as you head into retirement.
I’ll be hosting a chat about this month’s selection at noon Eastern on Sept. 29 at washingtonpost.com/discussions. My guest will be Guy Birken, who will take your questions about maximizing your Social Security benefits.
Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.
