If you sign up for Social Security benefits today, you can expect to receive checks for 15 to 20 years, on average. If you have a family history of longevity, you could get checks for more than 25 years. That should add up to six figures in lifetime benefits for most people.
In years past, we could come up with a rough approximation of a person's lifetime benefit by multiplying their checks by the number of months they expect to claim. But that doesn't work as well for today's Social Security beneficiaries.
The program recently celebrated its 90th birthday, but it's operating on borrowed time. Social Security is running out of money, and while there are plenty of ways to save it, they all come at a cost. We have no idea what benefits will look like in a decade, but we can do a few things to keep our retirement plans flexible.
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What's going on with Social Security?
Contrary to what some believe, Social Security will see its 100th birthday, even in the worst-case scenarios. But it's almost guaranteed to look different by then. The latest Trustees Report, released in June, predicted that the program's combined trust funds would be depleted in 2034, eliminating one of three critical funding sources for the program. The other two are the Social Security payroll taxes workers pay and the benefit taxes that many seniors pay -- yes, even with the passing of President Donald Trump's "big, beautiful bill."
Speaking of that law, a report from the Office of the Chief Actuary found that by reducing taxes for some workers and seniors, it will accelerate Social Security's trust fund depletion from the third quarter of 2034 to the first quarter of 2034. The Trustees Report didn't take this into account since the "big, beautiful bill" passed after its release.
We're heading toward a roughly 20% benefit cut for all current and future beneficiaries if we continue on the present track. However, that's unlikely to happen. Social Security faced insolvency concerns once before in the 1980s. Back then, the government made changes, like raising the full retirement age (FRA) -- which effectively cut benefits for younger workers -- and introducing benefit taxes on seniors to keep checks going out as scheduled.
Washington will likely step in this time as well, but it's unclear what the final fix will look like or when Congress will put together a plan. Republicans and Democrats are aware of the situation, but few are eager to step up and propose a solution because it's almost guaranteed to make people unhappy.
What Social Security could look like on its 100th birthday
There are really only three ways to solve Social Security's funding crisis:
- Increase taxes on workers and/or seniors claiming Social Security benefits.
- Reduce benefits available to current and/or future beneficiaries.
- Do a mix of the first two: increase some taxes and reduce some benefits.
Every scenario leaves someone with less money in their pockets. Seniors may find that their checks don't go as far in 10 years as they do today. Workers may have to pay more into the program than previous generations, leaving them with less money to cover their bills or save for retirement.
But it's difficult to say what kind of benefit cut or tax increase we're talking about. It depends on several factors, including the types of strategies enacted, how quickly they're implemented, and any further legislative changes that affect Social Security over the next few years.
How to plan around Social Security's uncertain future
You don't have to plan for a retirement without Social Security. If you want to plan for the worst-case scenario, expect to receive about 80% of your current benefit after the trust funds are depleted. But note that even this is just an estimate.
Save as much as you can for retirement on your own right now. The more personal savings you have, the better prepared you'll be to navigate whatever the future holds for Social Security. If you're still working, consider delaying retirement as well to give yourself more time to save and reduce your retirement costs.
The real work begins once Washington finally agrees on a Social Security proposal. When that happens, it'll be time to reexamine your retirement budget to see what changes you might need to make to maintain your financial stability.
