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A new report from a respected budget watchdog came out this month with a scary headline: When Social Security’s trust fund runs out, every retiree’s check is cut by about 24% (1). For the average beneficiary, that’s about $500 per month—more than many seniors spend on groceries (1).
I’ve been a CPA since 1981, and I’ve watched Washington wave the same red flag since the 1983 rescue that saved the system. So let me tell you what today’s headlines leave behind.
First, the fear of social security is not a new thing. I was a Wall Street investment advisor in the 1980s, and even then securities salespeople were following the Social-Security-is-going-broke routine. It was never a lie: Social Security has had problems for decades. And investment advisors and headline writers have been using it to scare people for decades.
So here’s the truth: Although the problems are real, the headlines can make it seem even scarier than it is.
Social Security’s trustees say the retirement funds won’t run out until 2033 — and even then, payroll taxes will still cover about 77% of scheduled benefits (2). “Bankrupt” never means “broke.”
This sharp figure of 24% comes from a watchdog using a new projection that pulls the shortfall to the end of 2032, after the 2025 tax cuts cut the program’s revenues (1)(3). The official 2026 Trustees Report, due this month, will reset the clock.
Either way – 2032 or 2033, 23% or 24% trim – the average $2,000 monthly check (4) doesn’t disappear. It shrinks. This is a real problem worth planning for, not the apocalypse that panic traders are selling. Here are six steps I would take right now – none of which involve putting your savings into something you’ll regret.
1. Understand what ‘bankrupt’ really means
Start here, because all the confusion hinges on a word that people read wrong. “Bankrupt” does not mean that Social Security stops making payments. This means the surplus is exhausted and the program can only pay what payroll taxes bring in.
This is about 77% of defined benefits (2) – a real cut, but not zero. CBO estimates that the deficit could deepen over time, with estimates reaching the 23% to 28% range (5).
And the date is a moving target. The official trustee report still says 2033; New watchdog says Math 2032 (1). Congress has reformed the system before – most famously in 1983 – and has several years to do it again. And they almost certainly will.
2. Don’t let fear choose the age of your claim.
Here’s the step that really costs people money: nervously claiming at age 62 to “get it before I’m gone.”
Think about what he does. To avoid a potential 24% deduction a few years from now, you’ll secure your guaranteed deduction today. Claim at age 62 with a full retirement age of 67 and you’ll get about 70% of your benefit — a 30% reduction, permanently (2).
Wait, and the math will turn. The SSA adds about 8% for each year you delay your full retirement age until 70 (2). For couples, often the higher earner has to wait while the lower earner claims first. The right age is more nuanced than “catching it early” – I’ve gone through the trade-offs before.
Getting this one decision right is more valuable than almost any other money-related move you make in retirement, and it’s an easy lever to miss in itself. You may have to pay several times more for a fee-checked second opinion.
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3. Get your own number – averages don’t pay your bills
Each scary headline quotes a national average. Your retirement doesn’t run on averages – it runs on your numbers.
So find it. Create a My Social Security account at SSA.gov and keep track of your earnings. A single error in that record can silently truncate your checks for the rest of your life, so check it for accuracy.
While you’re at it, there are a few boxes worth checking before you file. Knowing your actual profit turns a vague fear into a number you can plan around.
Quit immediately – Most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for over 35 years. Do you want concrete advice? Sign up for the free Money Talks newsletter. It takes 10 seconds. No sparkles. no spam.
4. Create Income You Really Have Control Over
Notice what each of these improvements have in common: control. You can’t vote for yourself a bigger Social Security check, but you can build an income around it that no amount of Congress can touch.
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5. If you’re home-rich but short on cash, know your options
Many retirees who are feeling benefit cuts are sitting on a paid-off house and a depleted bank account. If that’s you, your home equity is a potential backstop.
I’ll be blunt: I’m not a fan of these for everyone. They’re expensive and complicated, and they’re the wrong thing for a lot of people. But for a homeowner who wants to stay put and needs the income, it’s an option worth considering before dismissing it.
If you’re age 62 or older, the equity in your home can turn into cash you can use right now. a reverse mortgage Allows eligible homeowners to convert a portion of their home equity into the fund – while maintaining ownership of their home.
How it can help you:
- Free up your monthly budget with no required monthly mortgage payments*
- Cover everyday expenses or build an emergency cushion
- make home improvements
- Fund the retirement lifestyle you want
See how reverse mortgages work and whether you qualify.
6. Protect every dollar – and expand
If your check gets smaller, each dollar has to work harder. And here’s an ugly truth: Scammers track these headlines too. Fake “benefit suspension” and “clawback” threats are among the most common scams directed at retirees right now.
So tighten the screws on everyday costs and protect the benefits you get.
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bottom line
The sky is not falling. Social Security has been “going bad” my entire career, and each time, Congress has fixed it at the last minute — usually with some mix of higher taxes, higher retirement ages, and smaller benefits for higher earners. They will almost certainly do it again, because letting the system fail is political suicide.
This does not mean do nothing. This means planning based on facts rather than fear. Know your numbers, claim with a strategy, control your income, and use 2032 to scare anyone into a product you don’t need.
In short, plan so well that you can stop refreshing the headlines — and start enjoying the part of retirement that really matters.
Source: Committee for a Responsible Federal Budget (1); social Security Administration (2); CBS News (3); cnbc (4); Luck (5).