Social Security: The Real Crisis

Misleading or incomplete information could cost you a small fortune in missed benefits. We’ll put you on the right path to maximize your income.

- Kevin McCormally

Social Security will pay out nearly $1 trillion in benefits this year. For more than half of all recipients, the payments are more than 50% of their retirement income. But for the eighth year in a row, this critical pay-as-you-go program will take in less in taxes than it pays out in benefits. If nothing is done to change the system and the economy behaves as expected, a financial catastrophe demanding across-the-board benefit cuts will arrive in 18 years (see the box on page 28 for more about the shortfall). // You’ve heard this lament before, of course, along with assurances that, sooner or later, members of Congress will get around to doing something to shore up the system. But focusing on the long-term crisis masks a much more immediate threat, one that can explode long before 2035—perhaps when you, or someone you know, walks into a local Social Security office, takes a number and waits to talk with an agent about claiming benefits. The chances are all too good that you will get incomplete or misleading information that could cost you a small fortune in missed benefits. // That’s what happened one day last December to Joseph and Christine Biernat of Southington, Conn. Their goal was to arrange for Christine’s benefits to start flowing when she turned 65 in February 2017 and to check out Joe’s options. Social Security got it half right.

Christine, a registered nurse who spent many of her working years as a homemaker, knew that her “full” benefit of $814 would be trimmed to $762 because she was claiming a year before her full retirement age (FRA is 66 for those born from 1943 through 1954 and will gradually increase to age 67 for those born later). Applying was a breeze, and she got her first payment via direct deposit in March.