Financial Advisers Offer Guidance Amid Social Security Uncertainty

Social Security isn’t shattered, but it’s shaky. The latest report on Social Security predicts that the combined retirement and disability trust fund reserves will run out in 2035, causing concern among Americans nearing retirement. The 2024 Social Security and Medicare trustees report projects insolvency one year later than last year’s estimate, thanks to a strong economy and wage growth boosting payroll tax payments.

While the fund won’t be completely empty in 2035, beneficiaries may face a 17% cut in benefits if no changes are made. This could have a significant impact, as Social Security paid out nearly $1.4 trillion in benefits last year to about 67 million Americans. For many seniors, Social Security provides a substantial portion of their income, with about half relying on it for at least half of their income.

Experts are advising clients to plan for a potential reduction in benefits. Some suggest assuming a reduced benefit and saving more in other retirement accounts. Others recommend delaying Social Security until age 70 to maximize benefits. However, not everyone has the luxury of delaying retirement, especially those in physically demanding jobs.

Congress has less than a decade to address the shortfall in Social Security funding. The potential cuts in benefits could have a significant impact on millions of Americans, especially those who rely heavily on Social Security for their retirement income. It’s crucial for lawmakers to take action to ensure the long-term stability of the program.