Thinking about the future of Social Security reminds us of watching a disaster movie in slow motion. We know the two trains are going to collide or the ship is going to hit the iceberg, yet the Big Event is years in the future, approaching inexorably but at a snail’s pace. Meanwhile, those with the power to change the course of events are spending their time discussing the coming crisis rather than dealing with it.
If we sound cynical, it’s only because the predicted slashing of Social Security benefits by one-fifth or more has been talked about for years. The Big Cut that will take place when the trust fund runs dry is now predicted to happen in 2034, unless Congress and the President act to shore up the system. Social Security is not disappearing at all, but a 20–25 percent benefit cut would still spell financial disaster for millions of retirees.
To get a picture of just how reliant people are on Social Security, we examined this article from Investopedia, written by reporter Jordyn Bradley. We also took a deeper look at the 2024 survey by Nationwide on which Bradley’s article is based. It paints a picture of future retirees caught in a dilemma of uncertainty. Our view: getting the right financial advice has never been more essential.
For Most Beneficiaries, Current Benefits Fall Short of Basic Needs
In reviewing the Nationwide data for Investopedia, Bradley notes that the majority of Social Security recipients said their current benefits don’t cover their basic needs. That means any reduction in those benefits would be a serious setback.
“The future of Social Security is on shaky ground,” she writes. “If Congress fails to reform the program, the funds that pay out benefits to millions of recipients will be depleted by 2034.”
Analyzing the Social Security Shortfall and Retiree Sentiments
While Bradley’s article didn’t address specific survey responses in the Nationwide report, we were struck by one particular graph. Essentially, the question being asked was, if future Social Security benefits were to be cut by 25 percent, what action would you take? Respondents could list more than one answer.
We were mildly encouraged to note that roughly one-quarter of respondents indicated that their retirement income from other sources could make up the shortfall. Moreover, about one in five respondents said they planned to boost retirement savings to compensate.
However, there’s a darker side to the survey. Nearly a fifth of those responding said they planned to take no action at all, “because whatever I do is hopeless.” Another significant group of respondents (14 percent) were taking no action because “I don’t know where to start.” Many simply plan to keep working indefinitely, their hopes for retirement fading away.
Financial Vulnerability: The Reality of Missing Benefit Payments
“To illustrate just how challenging things are for retirees,” the Investopedia article notes, “Nationwide asked U.S. adults who currently receive or expect to receive Social Security what would happen if they missed half of a monthly payment. More than 60 percent said they could not survive financially.”
Bradley also points out the sheer scope of Social Security’s impact. Roughly 74 million people are receiving benefits — more than 22 percent of the entire population. Despite the fact that Social Security was never meant to be the sole support for retirees, says the article, “It’s estimated that nearly 22 million U.S. retirees rely on the program’s benefits as their only source of income.”
How Future Uncertainty Complicates Retirement Planning Strategies
People are justifiably worried about Social Security’s future health.
Bradley writes, “More than 80 percent of Americans are concerned about Social Security’s long-term outlook, Nationwide found. Planning for the future is difficult when you’re not sure what benefits, if any, will be available to you.”
“There is definitely financial uncertainty across generations when it comes to Social Security,” Shannon Benton, the executive director of The Senior Citizens League, told Investopedia.
Proactive Savings as a Hedge Against Potential Benefit Cuts
Bradley also spoke with certified financial planner Jason Fannon, who said “he is telling younger generations to plan for their retirements as if Social Security won’t be a reliable option.”
Fannon told Bradley, “If I were a younger person, I would approach retirement as if it wasn’t going to be available to me. I don’t think that’ll be the case, I think we’ll have Social Security, but it might look a little different. I would suggest not relying on it being there [for planning purposes].”
Fannon also told Investopedia that he’s advising clients in their 40s and 50s “to beef up their savings in case benefits are cut.” He believes this age group “will be hit the hardest by reduced benefits” since many are 10 years away from filing Social Security claims.
“People who are in their 50s can’t look at the Social Security calculator and say, ‘This is what I’m going to have for retirement,’ because they don’t know,” Benton said. “It could very well be cut quite a bit even by the time they retire.”
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