Social Security has long been a cornerstone of retirement planning for millions of Americans. For many, it’s not just a monthly check. It’s the primary source of income after decades of work. However, in recent years, questions have arisen about its stability. Could your benefits be at risk? And if so, how do you protect yourself?
Whether you’re approaching retirement or just starting to think about your financial future, understanding the risks to your Social Security benefits is more important than ever. Let’s unpack what’s at stake, what the warnings mean, and how you can safeguard your income.
The Trust Fund Is Shrinking, But It’s Not Going Bankrupt
One of the biggest fears circulating is that the Social Security program is “running out of money.” While it’s true that the Social Security Trust Fund is projected to be depleted by the mid-2030s, this doesn’t mean the program will disappear.
Even if the trust fund runs dry, ongoing payroll taxes from current workers will still cover about 75–80% of scheduled benefits. In other words, you might receive less than expected, but you won’t receive nothing. However, if Congress doesn’t act to reform the program, reduced benefits could become a reality for future retirees.
Early Retirement Can Hurt Your Long-Term Benefits
Claiming Social Security early, at age 62, may be tempting, especially if you’re retiring or in need of income. However, doing so can significantly reduce your monthly benefit for life. Waiting until your full retirement age (typically 66–67) or even until age 70 maximizes your payout. The danger? Millions of people claim early, sometimes out of fear that the system won’t be around later. Ironically, this decision often leaves them with a lower income in the years they need it most.
Working While Collecting Could Trigger Benefit Reductions
If you decide to work while collecting Social Security before your full retirement age, your benefits could be temporarily reduced depending on how much you earn. This is known as the Retirement Earnings Test. The good news: Once you reach full retirement age, Social Security recalculates your benefits and adjusts them upward to account for the temporary reductions. But if you’re not aware of the rules, it could cause confusion—or worse, an unexpected dip in income.
Errors In Your Earnings Record Can Cost You
Your Social Security benefits are calculated based on your 35 highest-earning years. But what if those records are inaccurate? Mistakes in your earnings history, such as missing years, incorrect income numbers, or unreported work, can result in lower benefit amounts. That’s why it’s crucial to regularly check your earnings record through your “My Social Security” account. Catching errors early gives you time to fix them before it’s too late.
Divorce Rules Can Affect Your Benefits
If you’re divorced, you may be eligible to claim benefits based on your ex-spouse’s work record. But not understanding the rules could mean leaving money on the table or getting denied outright. To qualify, your marriage must have lasted at least 10 years, and you must be unmarried at the time of claiming. Knowing how divorce affects eligibility is key to avoiding benefit loss, especially for individuals who may have stayed home or earned less during the marriage.
Your Benefits Can Be Taxed
Yes, you read that right. Your Social Security benefits can be subject to federal taxes depending on your overall income. If you’re not prepared for that tax bill, it can eat into your monthly payments, especially if you’re drawing income from retirement accounts, pensions, or a part-time job. Knowing your “combined income” (which includes half your Social Security benefits plus other sources) helps you plan ahead and avoid unpleasant surprises come tax season.
Government Workers Could See Lower Benefits
If you worked in a job where you didn’t pay Social Security taxes, like some government or public sector positions, you might face benefit reductions under the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO). These rules reduce your Social Security if you also receive a pension from that job. Many workers are shocked to learn that the benefits they thought they’d earned are significantly reduced due to these complex formulas.
Policy Changes Could Impact Future Benefits
Finally, Social Security is a politically charged issue. Future reforms, like raising the retirement age, changing benefit formulas, or increasing payroll taxes, could impact how much you receive. Staying informed about proposed legislation and preparing backup savings plans is crucial, especially if you’re still years away from retirement. Change is coming. It’s just a question of when and how.
Don’t Panic, But Do Prepare
The good news? Social Security isn’t going anywhere soon. But that doesn’t mean your benefits are guaranteed to be safe or sufficient. The system is complex, and small mistakes, misunderstandings, or missteps could cost you thousands over the course of retirement.
Being proactive—checking your earnings, understanding your claiming strategy, and following policy changes—can help you protect the money you’ve earned and count on for your future.
Have you checked your Social Security earnings lately? Are you planning to claim early or wait it out?
Read More:
5 Things Retirees Are Doing Wrong with Their Social Security (That’s Keeping Them in Poverty)
The Best Age to Take Social Security, Based Upon Various Life Expectancy Scenarios
Riley is an Arizona native with over nine years of writing experience. From personal finance to travel to digital marketing to pop culture, she’s written about everything under the sun. When she’s not writing, she’s spending her time outside, reading, or cuddling with her two corgis.
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