Social Security Cuts Could Be Coming. Do These 3 Things to Compensate

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(Maurie Backman)

Social Security has a funding problem. In the coming years, the program is expected to owe more in benefits than in income. And while Social Security does have trust funds, it can tap into that gap, once those cash reserves run out, distributions can hit the table — and pretty quickly.

It is, of course, in the interest of legislators to act and find a way to prevent benefits from being cut. If seniors lost much of their Social Security income, it could be enough to fuel a widespread poverty crisis.

But right now, Social Security is just over a decade away from depleting its trust funds according to the trustees’ latest forecast. And as of right now, lawmakers have no concrete plan to avoid benefits.

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As such, it’s important to brace yourself for the fact that those cuts are coming. And if you’re nearing retirement, here are a few things you can do to make up for it.

1. Rethink Your Retirement Spending

Perhaps you have plans for your final years that require a certain amount of money. Now may be the time to reconsider them. Prioritize some so you can make the most of a lower retirement income and not commit to larger long-term expenses that may become unaffordable over time due to Social Security cuts (e.g., a larger apartment with higher HOA costs) .

2. Increase your savings

If you still have some time in the workforce ahead of you, use it to your advantage by maximizing your IRA or 401(k). Both plans will see their annual contribution limits increase in 2023, so you have an excellent chance of working away extra cash for your senior years.

3. Postpone your Social Security application

Social Security cuts may be unavoidable. But you can get a higher monthly benefit to begin with by deferring your application past full retirement age (which is 66, 67, or somewhere in between, depending on the year you were born).

Once you delay your application by even a month, you will get a higher Social Security benefit for life. And while this incentive ends at age 70, you have the option to increase your monthly benefit by 24% or more. If you do this and the benefits are reduced, start from a higher baseline.

Now you may have to be willing to work a little longer to postpone your benefit claim until you are 70. But this can also give you a chance to grow your nest egg, so it’s really a win-win situation.

The idea of ​​Social Security cuts can be scary. But it is also the reality that current and future retirees face. Ideally, legislators will find a way to fix the Social Security funding gap and avoid benefit cuts. But if not, it’s important to have a plan in place to make up for the lower benefits just in case it ends up like this.

The $18,984 Social Security Bonus 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 give your retirement income a boost. For example, one simple trick could save you as much as $18,984…a year! Once you know how to maximize your Social Security benefits, we think you can retire confidently with the peace of mind we all strive for. Click here to learn how to 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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