Although I have a few years before I am eligible for Social Security, I’m close enough that I am thinking about three key issues:

1. At what age to start claiming it;
2. Whether it will still be there when I request it; and, regardless of Social Security,
3. how much does one need to live on in retirement?

By Mark Najarian (MoneyAndMarkets.com) 

As for the future of the program, the Social Security Administration itself admits it will eventually run low. According to the SSA’s website, it calculates that by 2034, if changes are not made, it will only have enough to pay 79% of its overall costs.

Most experts have attempted to reassure people about the program, saying that there are many solutions – raising taxes, raising the retirement age, reducing cost-of-living hikes, etc.

A recent article in the Los Angeles Times stated that not only can Social Security be fixed, but it should be expanded. It proposed several ways. First, it said, the Social Security payroll cap should be eliminated. Currently, wages above $118,500 a year are not taxed for Social Security purposes. Why? It asks. Why should the wealthy, including “billionaire bankers,” pay a lower percentage of their incomes into the Social Security Trust Fund than “their secretaries and chauffeurs?” That move would raise an additional $135 billion a year.

1) It also proposed an end to exemptions on investment income from Social Security taxes. The wealthy make 40-50% of their money from investment income – taxing that would bring in another $75 billion a year.

2) It also called for an end or reduction of the tax breaks for private retirement accounts – such as 401(k)s and IRAs – so those funds could help fund Social Security, said the article written by Steven Hill, a senior fellow at the New America Foundation.

3) Others have also proposed that the full retirement age be delayed from the current 66-67 (for most people) to later, given the longer lifespans of today’s seniors.

The other question, about when to take your benefits, is an individual matter, of course. You can start at age 62, but you receive a lower amount than if you wait until your full retirement age, or even up to age 70, when you would receive enhanced payments.

Many recent articles have addressed the issue, and there’s no clear answer. The first thing to do is to find out what you likely will get. You can do that by creating an account at www.ssa.gov. The site will have all of your earnings through your career listed, and it can give an estimate of how much you will receive if you retire at various ages (given your current rate of wages). The average benefit is $1,348 a month and the maximum is $2,639.

CNBC quoted one expert on the matter of when you should start claiming benefits.

“We see a lot of people who think that because age 62 is when they can start taking Social Security, they should,” said Robert Seiler, a financial adviser at ASC Financial Group. “We call it the ‘land-grab mentality’ — it’s there, you can take it, so you do.”

Taking it early is fine if you need the money, but the “grab” will cut your benefits substantially. The example CNBC gave:

“Assume your full retirement age is 66, at which point you’re due a monthly benefit of $1,000. If you choose to get checks starting at age 62, your monthly payment will be reduced to $750, or a 25% reduction. Every year you delay taking your benefit increases the amount you’ll receive for the rest of your life by about 8% (until age 70, after which it won’t increase any further).”

Taxes will also play a role, experts point out, as there are limits to what you can earn outside of Social Security before some of those benefits would be taxed.

Aside from Social Security, a recent article by USA Today addressed the issue of how much one needs to live on in retirement, citing a study titled “The Current State of Retirement: A Compendium of Findings about American Retirees” [in which it found that:]

• The estimated median annual household income among retirees is $32,000;
• More than half of retirees (53%) live on less than $50,000.

It all depends, of course, on where you live, whether you still have a mortgage, and your lifestyle...