Americans are rethinking retirement plans as longer lives, rising costs collide
OpenTheBooks CEO John Hart joins 'Varney & Co.' discussing long-term Social Security and Medicare deficits as fiscal pressures mount.
Americans are rethinking when to retire and claim Social Security as life expectancy collides with uncertainty about the program's future.
Social Security could reach payout in late 2032 or early 2033, which could trigger automatic benefit cuts if Congress fails to act. At the same time, Americans are living longer, extending retirement from 15 years to nearly three decades in some cases, according to Realtor.com.
More than 68 million Americans are dependent on Social Security benefits as of April 2026, according to the Social Security Administration.
Waiting until age 70 to start collecting Social Security keys in a higher monthly payment, but applying early can help protect against potential cuts.
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Social Security could reach payout in late 2032 or early 2033. (Stock)
“Social Security has a funding problem,” said Evan Mills, a financial analyst at Scholar Advising. “If you apply now, you're essentially betting that Congress isn't doing anything about the underfunding problem.”
But delaying benefits has its own risks.
“And you bet you're not going to live long enough to regret taking a small check if Congress steps in and fixes the funding problem, they have a lot of pulling power,” he added.
Rising costs add to the pressure. Inflation, higher property taxes, insurance and health care costs are also weighing on retirees, especially those on fixed incomes, Realtor.com reports.
“Many retirees have built plans thinking that Social Security will cover a larger percentage of their living expenses than it actually is,” says Elias Friedman, certified financial planner and founder of Kadima Wealth.
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Rising costs add to the pressure. Inflation, high property taxes, insurance and health care costs are also weighing on retirees. (Stock)
Taxes can make the decision even more difficult. Claiming benefits early while withdrawing from retirement accounts can trigger so-called “tax torpedoes,” leading to a sudden increase in tax liability.
“It takes a bigger bite out of your Social Security benefits than you might expect,” George Dimov, CPA and founder of Dimov Tax, told Realtor.com.
Regardless, experts say we shouldn't make decisions based on fear.
“I advise clients to be careful in making major Public Safety decisions based on scary stories,” Friedman said. “I still believe that delaying benefits can make a lot of sense for retirees with life expectancies, especially married couples where increasing the benefit of the higher earner can help protect the surviving spouse down the road.”
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Taxes can make the decision even more difficult. (Stock)
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With many unknowns, experts say flexibility is also key, whether that means working longer, cutting costs, cutting back or adjusting the way you spend money.
“Living longer means housing longer,” Realtor.com Senior Economist Joel Berner told FOX Business via email. “As we see, monthly budgets based on welfare income may not be as certain as they used to be, so finding a low-cost housing option is critical to planning for a long and happy retirement.”
