Social Security Cuts Could Be Coming: 1 Simple Way to Protect Your Retirement


Social Security benefits are a lifeline for millions of older adults. In fact, nearly one-quarter of workers say they expect their monthly checks to be their primary source of income in retirement, according to a 2022 survey from the Transamerica Center for Retirement Studies.

However, the Social Security program is facing a cash shortfall, which means that benefit cuts could be on the horizon. While there’s not much you can do to prevent potential cuts, you can take steps to protect your retirement income. And there’s one simple move that could boost your monthly income by 24% or more.

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The Social Security Administration (SSA) relies primarily on payroll taxes to fund benefits. Current workers pay into the program through taxes, and that money is paid out to today’s retirees in the form of benefits.

In recent years, though, the money coming in from taxes hasn’t been enough to completely cover benefit payments. To bridge the gap, the SSA has been dipping into its two trust funds to continue paying out benefits in full.

But these trust funds won’t last forever. According to the SSA Board of Trustees’ latest estimates, both funds are expected to be depleted by 2034. At that point, the money coming in from taxes and other sources of income will only be enough to cover around 80% of projected benefits.

The good news is that Social Security isn’t going bankrupt. As long as workers continue paying taxes, there will always be at least some money to pay out in benefits. But if Congress can’t agree on a solution before 2034, Social Security could be cut by up to 20%.

While it’s likely that lawmakers will come up with some sort of solution before the situation becomes dire, it’s wise to avoid banking on that — especially if Social Security is going to be a significant source of income in retirement. A simple way to boost your monthly income and reduce the impact of potential cuts is to delay claiming Social Security.

Your full retirement age (FRA) is the age at which you’ll collect the full benefit amount you’re entitled to based on your work record, and that’s 67 years old for anyone born in 1960 or later. File before your FRA (as early as age 62), and your monthly payments will be permanently reduced.

If you delay Social Security (up to age 70), you’ll collect your full benefit amount plus a bonus of at least 24% per month. If benefits are cut by 20%, the 24% boost you’ll receive by delaying Social Security can help cushion the blow.

Though delaying Social Security is simple, it’s not always easy. But it can result in a life-changing benefit adjustment.

For example, say you have an FRA of 67 years old and by filing at that age, you’d collect $1,800 per month (which is roughly the average benefit amount among retirees, as of March 2023). If you file at 62, your benefits would be permanently reduced by 30%, leaving you with $1,260 per month. On the other