For millions of older Americans, Social Security is a crucial lifeline. If you’re approaching retirement, chances are you’ll depend heavily on these monthly benefits. But the truth is, Social Security may not look the same in the future.
Several changes could affect how much you receive and when. Here are three possible shifts to keep on your radar.
1. Possible Benefit Cuts
Social Security is funded mainly through payroll taxes, but as more people retire, fewer workers will be paying into the system. According to the program’s Trustees, the Social Security trust funds could run out by 2034. If that happens, only 81% of scheduled benefits would be payable.
That means retirees could face a nearly 20% cut in their monthly checks unless Congress takes action. While lawmakers could still pass reforms to prevent cuts, there’s no guarantee. The safest move is to build your personal retirement savings so you’re not fully reliant on Social Security.
2. A Higher Full Retirement Age
Another possible change is an increase in the full retirement age (FRA)—the age at which you can claim benefits without a reduction. Right now, FRA is 67 for people born in 1960 or later. Some lawmakers want to raise it to 68 or 69.
While this could strengthen Social Security’s finances, it may force many workers to delay retirement or face smaller checks if they claim early. To prepare, consider saving more aggressively now, so you’re less affected if the FRA shifts upward.
3. A New Formula for COLAs
Social Security payments include a cost-of-living adjustment (COLA) each year to help retirees keep up with inflation. Currently, COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Critics argue this measure doesn’t reflect the real expenses of seniors, such as medical care. Advocates are pushing for a formula tailored to older adults. If adopted, retirees could see larger COLAs in the future. However, this change isn’t guaranteed, so once again, personal savings will remain important to keep pace with rising costs.
Preparing for the Future
Social Security has been around for decades, but that doesn’t mean it won’t change. Cuts, a higher retirement age, or a new COLA formula could all affect your benefits. While lawmakers debate reforms, your best strategy is to save steadily, reduce debt, and explore other sources of retirement income.
Social Security will likely continue to play a major role in retirement, but the program faces challenges that could reshape benefits in the years ahead. Cuts to monthly checks, a higher full retirement age, or a different COLA formula are all possible.
By staying aware of these changes and building your own financial safety net, you can approach retirement with more confidence and stability.
