More Than Half of Retirees Are Worried About Social Security. Should They Be?

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(Maurie Backman)

Millions of seniors today collect monthly Social Security benefits. And for many, that benefit is their sole or primary source of income.

This year, many seniors who rely heavily on Social Security struggled in the wake of rampant inflation. But next year, Social Security will get its biggest cost-of-living (COLA) adjustment in decades. Once benefits rise by 8.7%, seniors could gain much more purchasing power.

In fact, COLAs were implemented decades ago to ensure that Social Security benefits rise in line with the rate of inflation. But in the not-so-distant future, Social Security seniors may be looking at the opposite scenario: cuts in benefits. And not surprisingly, many retirees are concerned.

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Will cuts come to the pike?

In a recent Motley survey, 72% of respondents say they rely entirely or heavily on Social Security to cover their retirement costs. And nearly 60% say they’re worried about Social Security’s staying power.

Let’s get one thing out of the way: Social Security is not threatens to disappear completely. Cutbacks, on the other hand, are a clear possibility.

Social Security is facing a revenue shortfall as baby boomers are leaving the workforce en masse and too few workers are coming to replace them. Workers heavily fund Social Security through payroll taxes, but if the workforce shrinks due to a mass retirement of baby boomers, the program will lose money.

Social Security has trust funds it can tap into to keep up with planned benefits for a while as earnings fall. But those funds are expected to run out in just over a decade. And once that happens, benefit cuts are a distinct possibility.

That could spell trouble for seniors who get most or all of their retirement income in the form of Social Security. After all, those who have been out of work for many years cannot easily sneak back in and start earning a paycheck. As such, benefit cuts could fuel a major poverty crisis.

The good news is lawmakers don’t want to see this happen under their auspices. They are therefore inclined to invest in preventing benefit cuts.

But so far no official action has been taken in that direction. And unless lawmakers devise some Social Security changes soon, seniors could be in for a rude awakening in just over a decade.

Saving can really help

For current retirees, it may be too late to boost their personal savings. But current workers need to recognize that Social Security cuts can’t be ruled out — and build nest eggs to avoid getting hurt by them.

Even without cuts, Social Security only replaces about 40% of the average worker’s salary before retirement. And most seniors need a lot more income to live comfortably.

Social security could prevent benefits from having to be reduced. But those looking to avoid financial stress in retirement would do well to stash plenty of money away in an IRA or 401(k) plan to supplement those benefits and avoid a personal cash crisis.

The $18,984 Social Security Bonus that most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can help boost your retirement income. For example, one simple trick can earn you an extra $18,984… per year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all crave. Click here to find out how you can learn more about these strategies.

The Motley Fool has a disclosure policy.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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