Social Security cuts are on the table. Do these things now to prepare | Smart Change: Personal Finance
The latest report from the Social Security Trustees has confirmed a scenario that worries many people: The program is facing a large fiscal deficit that could force it to cut benefits by 2035. This is the year when Social Security trust funds are expected to deplete.
Once the benefit cuts are implemented, seniors can see more than 20% of their Social Security income disappear. This is a scary idea. As such, those who rely on Social Security must now take steps to prepare for what could be a significant reduction in benefits. Here’s how.
1. Rethink your retirement lifestyle
You may enjoy living in a certain part of the country and spend your days doing fun activities. But will this lifestyle be sustainable once Social Security benefits are cut? if not, right Now It’s time to start making changes. This way, you can increase your savings before this income stream is reduced.
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Think about which parts of the country are less expensive to live in, and consider relocating. Or replace some of the everyday activities that cost money with volunteer work.
2. Sell a bigger house when the housing market is hot
At the moment, housing prices are very high, and buyer demand is very strong. That’s because the housing market is sorely lacking in inventory. Thus, if you have a larger home with more space than you need, now might be the perfect time to sell. The money you make selling your home can act as a fillip for your savings so you can better hold out as your Social Security benefits decline.
Let’s say you own your home without a mortgage and can get $600,000 for it based on current home values. If you can sell your home on your own without the help of a real estate agent, you will make your entire profit. If you then buy a $350,000 home, you’ll have $250,000 to save and invest over the next 10 years or so, leaving yourself with more money to access while Social Security cutbacks are expected.
3. Back to work
Many people work in retirement because it gives them a relationship with their time. But in light of potential Social Security cuts, you may have to return to a job to make up for the reduced benefits.
Let’s say you’re in your late 60s and will be around 80 years old in 2035, when the benefits will be deducted. At this age, you may not have enough energy or mobility to hold a job, while now, part-time work may be more than possible. As such, you shouldn’t wait for your Social Security income to drop to get back to work, but instead start making some profits this year.
It’s good to prepare
There is still a chance that lawmakers can find a way to prevent the Social Security cuts. But this is not something you can count on. So it’s best to prepare for a reduction in Social Security income – and take steps to ensure that it does not lead to a world of financial turmoil.
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