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Don’t make hasty decisions about when to start your Social Security benefits.<\/p>\n
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Social Security\u2019s main trust fund is projected to run short in 2032, raising the possibility of across\u2011the\u2011board benefit cuts. For pre\u2011retirees in their early 60s, that timeline sits squarely inside their claiming window \u2014 and it\u2019s prompting a critical question: does the risk of future reductions make it smarter to start benefits early?<\/p>\n
If you\u2019re worried that Social Security benefits might be reduced due to ongoing funding challenges, it\u2019s understandable. And before you make a hasty claiming decision you can\u2019t undo, it\u2019s worth taking a closer look at what the projections actually mean \u2014 and how they should (or shouldn\u2019t) influence your filing strategy.<\/p>\n
Could Social Security Benefits Really Be Cut?<\/p>\n
The Social Security Old Age and Survivors Trust Fund is projected to be exhausted in the fourth quarter of 2032. At that time, it might only pay 78% of promised benefits, according to the 2026 Social Security Trustees Report<\/a>. That\u2019s a little more than six years away, well within the short-term planning horizon for pre-retirees. <\/p>\n The projections improve slightly if Congress combines the OASI fund with the Disability Insurance fund. In that case, the combined OASDI fund is projected to be exhausted in the third quarter of 2034 and could pay 83% of promised benefits. That\u2019s a little more than eight years away.<\/p>\n In either scenario, it\u2019s understandable if pre-retirees feel spooked. They could face future benefit cuts ranging from 17% to 22%. Some might even feel tempted to start Social Security benefits as soon as they\u2019re eligible, adopting a \u201cget-it-while-you-can\u201d mentality.<\/p>\n Let\u2019s pause and dig deeper into the considerations.<\/p>\n What Happens If Congress Doesn\u2019t Act?<\/p>\n There\u2019s no precedent for the Social Security trust funds being exhausted and Congress doing nothing to close the funding gap. And there are no published rules specifying how benefits would be reduced for retirees and beneficiaries. So we don\u2019t know exactly what will happen. <\/p>\n ForbesSocial Security Won\u2019t Go Bankrupt, But Hard Choices Are NecessaryBy Steve Vernon<\/a><\/p>\n All we know is that if the trust funds are exhausted, the only source for paying Social Security benefits will be the FICA taxes that then-current workers pay. At that time, Social Security benefits would need to be reduced so that the aggregate benefits paid match the aggregate FICA taxes collected. <\/p>\n If benefits were reduced across the board on a percentage basis, the funding percentages shown previously would equal the percentage of your benefit you\u2019d receive. <\/p>\n It\u2019s important to note that Social Security is highly unlikely to go bankrupt, and you won\u2019t lose all your benefits.<\/p>\n Also keep in mind that no politician has yet advocated for reducing the benefits of current retirees and near retirees, and President Trump has repeatedly promised not to cut Social Security benefits.<\/p>\n How Would Potential Cuts Affect Your Claiming Strategy?<\/p>\n Many retirement analysts, including me, suggest that the current optimum strategy for claiming Social Security benefits is often to delay the start of benefits for as long as possible. In many cases, the optimum starting age is 70, which is the maximum starting age with the highest monthly benefit. However, this conclusion assumes future benefits won\u2019t be reduced.<\/p>\n ForbesHow And Why I Delayed My Social Security Until Age 70By Steve Vernon<\/a><\/p>\n For the sake of this piece, however, suppose you\u2019re pessimistic that polarized federal politicians will agree on a solution to close Social Security\u2019s projected funding gap. Let\u2019s also assume a worst-case scenario \u2014 that Social Security benefits would be reduced by 22% near the end of 2032. <\/p>\n In this case, here\u2019s an important question: Should you start your Social Security benefits as soon as possible so you at least receive some money before benefits are cut?<\/p>\n