Due to recent cuts in the federal workforce, the decision of whether to claim Social Security benefits now or wait has become more complex than ever. These changes, which aim to reduce costs, have left many retirees wondering if they should act quickly to secure their benefits while they can.
The Social Security Administration is making significant staff reductions, dropping its workforce from 57,000 to 50,000. The move is part of a broader effort by the Trump administration, led by Elon Musk and the Department of Government Efficiency, to streamline government operations.
As former Commissioner Martin O’Malley points out, staffing at the Social Security Administration had already fallen to its lowest point in 50 years. He has warned that further cuts could delay benefit delivery for the first time in the program’s 90-year history. For those who rely on Social Security, this is a concerning development.
O’Malley had previously advised people to wait as long as possible to claim their benefits, but with the new changes, he says the decision has become more difficult. Despite his concerns, O’Malley remains hopeful that Congress will act to prevent further damage to the program, emphasizing that Social Security is crucial not only for individual beneficiaries but also for the broader U.S. economy.
Given the recent turmoil, many are asking whether they should claim their benefits as soon as possible to lock in whatever they can before things get worse. But experts advise against panicking. “I wouldn’t rush to collect,” says Jaime Eckels, a certified financial planner at Plante Moran Financial Advisors in Auburn Hills, Michigan.
Although the situation is concerning, processing delays are unlikely to lead to the collapse of the program, says Jack Smalligan, a senior policy fellow at the Urban Institute. He believes that Social Security is strong enough to handle these disruptions.
One key factor to consider is that claiming benefits early will reduce your monthly payments for life. The earliest age to claim benefits is 62, but for those born in 1960 or later, claiming at 62 results in a 30% reduction in monthly benefits compared to what you would receive at your full retirement age of 67. If you can afford to wait, delaying your claim until age 70 will increase your benefit to 124% of what you’d receive at full retirement age.
For current recipients, there’s no immediate reason to fear benefit cuts, says Smalligan. However, lawmakers must take action in the next decade to ensure Social Security’s finances remain stable. The retirement trust fund is expected to be depleted by 2033, and while this could lead to benefit cuts, Congress will likely exempt current retirees and those close to retirement, as it did in 1983 when similar changes were made.
If you’re planning to claim benefits soon, it’s best not to wait until the last minute. Due to the staff cuts, customer service and processing times may worsen. You can apply for retirement benefits up to four months before you want them to begin, and giving the Social Security Administration as much time as possible is a good idea to avoid delays. Mike Piper, a CPA and author of Social Security Made Simple, suggests that applicants should plan ahead to ensure everything is processed smoothly.
The situation is especially challenging for those applying for Social Security disability benefits. Because these cases require more review, they are more vulnerable to delays. The backlog of disability applications has already led to financial hardships for some applicants, with people facing bankruptcy and health problems as they wait.
Although the Social Security Administration did not comment on potential disruptions, it’s clear that some preretirees may feel more comfortable claiming benefits earlier than they had planned due to the uncertainty surrounding the agency. Eckels suggests that this is fine, as long as you understand the financial consequences of claiming early.
Spouses may also want to consider splitting the difference, with one claiming benefits early for peace of mind and the other waiting longer for the higher payment. For lower-earning spouses who plan to claim spousal benefits, waiting until age 70 doesn’t provide any additional benefits, as the maximum spousal benefit is 50% of the higher-earning spouse’s benefit at full retirement age.
Ultimately, Eckels advises that the decision of when to claim Social Security benefits should be based on what is right for each individual. It’s essential to take into account your personal situation, financial needs, and how long you expect to live in retirement. The best approach is to make an informed decision that suits your circumstances.
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