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Amid the uncertainty surrounding Social Security, here’s what financial advisors are telling clients
Social Security is not shaken, but it is unstable.
The new report on Social Security, which predicts that the combined retirement and disability trust fund reserves will go bankrupt in 2035 has made more Americans nervous, especially those approaching retirement who are worried about the benefits they can expect.
The 2024 Social Security and Medicare Trustees report projects insolvency a year later than last year’s estimate. This somewhat more favorable outlook stems from the strong economy and wage growth, which has increased payroll tax payments that finance the program. For now, low unemployment means more workers are adding to the program, even as a growing number of baby boomers begin to take advantage of its benefits, administrators said.
The potential depletion of the fund does not, however, translate into an empty box. There will still be money to pay benefits at this stage – albeit only 83% of what was promised to current and future beneficiaries. In other words, without a solution, beneficiaries could see a 17% cut in benefits.
“Congress is painting itself into a corner to resolve Social Security’s pending insolvency,” Mary Johnson, a policy analyst for Social Security and Medicare, told Yahoo Finance. “Failure to act on the program in a timely manner would lead to automatic benefit cuts.”
How widely would this cut be felt? The program paid out nearly $1.4 billion in benefits last year to about 67 million Americans. For about half of seniors, Social Security provides at least half of your incomeand for around 1 in 4 elderly people, it represents at least 90% of income.
There are several solutions to correct the deficit, including increasing payroll taxes that fund the program, currently 12.4% split equally between employees and employers. Other proposals include raising the retirement age for younger workers or increasing the upper limit on a person’s income that is subject to Social Security tax. For 2024, the Social Security tax limit is $168,600.
See more information: How to Find Your Social Security COLA Increase in 2024
Social Security beneficiaries could see a 17% cut in benefits in 2035 if no changes are made to the system. (Getty Creative) (Douglas Sacha via Getty Images)
Will Social Security be there for you?
One of people’s biggest fears in retirement is a reduction or elimination of Social Security in the future, according to research from the Transamerica Center for Retirement Studies. Seven in ten people are worried that Social Security won’t be there for them when they’re ready to retire. And nearly 1 in 3 people relies or expects to rely primarily on Social Security.
I spoke with several experts about the advice they are giving their clients about planning for Social Security as part of their retirement income. Here’s what they said:
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1. Assume a reduced benefit
Many planners said they already consider the potential Social Security deficit with their clients.
“I tell clients this is just the latest projection that there will be reductions in current and future benefits for retirees,” said Rob Williams, managing director of financial planning at Carlos Schwab. “The date changes and the amounts change slightly, but the story has not changed – the projections are not that benefits would suddenly cease or that Social Security would disappear.”
Many workers also raised their hands.
“In my conversations with clients, they already assume they won’t receive anything from Social Security,” Alvin Carlos, certified financial planner and financial advisor at District Capital Management in Washington, D.C., said in an interview.
“I try to set their expectations that they will still receive three-quarters of their benefits. But I encourage them to save more in their 401(k), IRA or brokerage accounts. And we recommend that most customers wait until 70 years to start collecting Social Security. It’s basically insurance against living to be 95 or a hundred.”
“My younger clients, probably 50 and under, discuss this in jest, but I actually mean it when we do our planning because I will tell them that I am not planning on taking Social Security,” added Alanna Morey, financial planner certified. with Private Wealth Advisor at Ameriprise Financial in Naples, Florida. “So for clients who are still in the accumulation phase, it’s really about planning to assume this isn’t going to be a big part of your retirement picture. For me, it’s better to do it this way and be overprepared than underprepared.”
See more information: What is the retirement age for Social Security, 401(k) and IRA withdrawals?
One of people’s biggest fears in retirement is the reduction or elimination of Social Security in the future. (Getty Creative) (PeopleImages via Getty Images)
2. Save, invest and don’t claim in advance
To reduce the stress you may have about whether Social Security will be available to you, take control by saving and investing, and start as young as possible, Williams added.
“The responsibility falls on each of us to make a plan, then save and, ideally, invest to build a nest egg. Control what you can control – saving and investing are those things.”
All of the planners I spoke with agreed that fear of losing Social Security can be a motivator for people to file for benefits as soon as they are eligible at age 62.
The problem: Claiming benefits early will drastically reduce your monthly check. It is not advisable.
“With news like Social Security being depleted and the emotions we all face, it’s natural to make a decision emotionally,” Williams said. “There’s a feeling I hear from clients: ‘I want to get the money while I can, before it’s gone’ or ‘I have to because they’re really going to screw it up.’”
The best way, he tells clients, is to think about the long term. “Stop, pause, step back for a moment, absorb those emotions, and then come up with a more reasonable plan that isn’t driven by emotions,” he said.
He suggests people aim for full retirement age. It’s 67 if you were born in 1960 or later. If you could wait until you were 70, great. “It takes discipline, but the longer you wait, the higher your benefit payments will be for the rest of your life,” he said.
Not everyone has the option of delaying Social Security. For example, workers in highly physical jobs may not be able to delay retirement and benefits due to physical issues, so they turn to Social Security as soon as possible. (Dan Dunkley via Getty Images)
3. Delay Social Security – only if you can
Waiting until age 70 is great advice for Americans who are in good health and have other sources of income.
But some people may not have a choice out of necessity.
This week, I received an email from a reader who clarified this point for me. He had read my column about how most Americans expect to retire from full-time work at age 62 and why I thought it was a bad idea.
He wrote: “Many of us don’t want to retire early, but we have no choice. My story is typical of those who work in retail or other highly physical jobs, as we can no longer do the work we are doing due to physical decline. So we take our Social Security as soon as we can. And many, again, like me, would like to return to work, but are told that we are not qualified for anything except the jobs we just left and that we are too old to start positions in non-physical job types. ”
He encouraged me to “take into consideration the number of people who cannot afford to work in an office their entire lives and have no choice but to retire early.”
He is right.
Congress has less than a decade to fix the shortcomings facing millions of Americans like this man. Let’s hope they finally take it seriously.
Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and author of 14 books, including “In control over 50: how to succeed in the new world of work” and “Never too old to get rich.” Follow her on X @kerryhannon.
Read the latest financial and business news from Yahoo Finance
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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