Social Security’s financial outlook just took another hit, and the political response has been more noise than action. Some near-retirees may be wondering whether to claim benefits early before there’s less to go around.
But reacting in fear could cost you far more than future cuts.
The trust fund is running dry faster than expected
According to Barron’s, the latest projections from the Social Security Trustees move the retirement trust fund’s depletion date to 2033 — about nine months earlier than previously estimated. One major factor is a new tax law that reduces revenue flowing into the system.
The nonpartisan Committee for a Responsible Federal Budget (CRFB) estimates that recent changes — including the permanent extension of 2017 tax rates and a new $6,000 senior deduction — will reduce annual revenue by around $30 billion. That speeds up the timeline for insolvency and leaves fewer options on the table for fixing the shortfall.
Why early claiming is still a costly move
It’s easy to see why someone in their early 60s might feel pressured to claim benefits as soon as they become available. But the core rules behind Social Security haven’t changed. Claiming early still means locking in a smaller monthly benefit for the rest of your life.
For anyone born in 1960 or later, claiming at 62 results in a 30% permanent reduction compared to waiting until full retirement age (67). Holding out until age 70 means a larger benefit that grows by 8% per year past full retirement age. That’s a meaningful difference over the long run.
Even if future benefits are cut, reductions will likely be applied as a percentage of your earned benefit. Claiming early just means you’re reducing your baseline before any cuts are even calculated.
No clear plan from Congress
Despite rising alarm bells, lawmakers aren’t racing to shore up Social Security. As Barron’s notes, Congress is the only entity with the authority to fix the funding gap, yet no serious plan has emerged. That leaves retirees and pre-retirees stuck waiting and guessing.
Most experts believe that a fix will be implemented before the trust fund is fully depleted. Historically, adjustments to Social Security have been phased in gradually and targeted at younger workers. That makes sudden, dramatic benefit cuts for current or near-retirees less likely, though not impossible.
Why wait if the fund is shrinking?
If your health is poor or your finances are tight, early claiming might be your best or only option. But if you’re in good health and have some savings, the math still supports patience.
It may seem risky to delay when the trust fund is running low, but the fundamentals of Social Security remain unchanged. Delaying benefits still results in higher monthly payments. Even if future cuts occur, they would likely reduce the benefit amount rather than eliminate it entirely.
The headlines may look bleak, but reacting to uncertainty with irreversible decisions can create bigger problems down the line. As with many aspects of retirement planning, a calm head and a custom strategy usually win.
What retirees may consider instead
Rather than claim benefits out of fear, many are exploring alternative strategies:
- Delay if possible. Even one extra year of work can boost your benefits. The increase is guaranteed, which is hard to match elsewhere.
- Earn extra income in your spare time. This company's members take surveys in their free time and collectively earn over $55,000 daily.
- Use savings to bridge the gap. If you have other resources, consider drawing from those while you delay your Social Security claim. This approach can often yield higher total income over time.
- Earn as much as possible on your emergency savings. SoFi Checking is offering 3.8% interest, plus a potential $300 signup bonus. (May change without notice.)
- Coordinate with a spouse. For couples, timing matters. One spouse claiming early and the other delaying could optimize household benefits and survivor payouts.
If you are concerned about what happens after 2033, it is worth running the numbers for a worst-case scenario. As Barron’s reports, financial planner Keith Fenstad advises younger clients to prepare for a one-third reduction in future benefits by building flexibility into their retirement plans, not by rushing to claim early.
That approach may feel counterintuitive, but it aligns with how Social Security is designed to work. A steady plan, grounded in math rather than fear, is still your best defense against an uncertain future.
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