3 Reasons to Expect Less Income From Social Security

There’s a good chance Social Security will end up being an important retirement income source for you down the line. And so knowing what monthly benefit you’re in line for is definitely a helpful thing.

To that end, there’s good news. You can get an estimate of your future monthly benefit even if you’re years away from retirement. All you need to do is create an account at SSA.gov and access your annual earnings statement, which will include a summary of recent wages plus information on the benefit you may be in line for.

But while it’s a good idea to access an estimate of your future benefit, your best bet is to take that number with a grain of salt. In fact, your actual retirement benefit could end up being much lower for these reasons.

1. You may be forced to retire early

To claim your full monthly Social Security benefit based on your earnings history, you need to wait until full retirement age (FRA) to file. That age is either 66, 67, or somewhere in between, depending on your year of birth. But you may end up being forced to claim Social Security early, and in doing so, you could wind up locking in a lower monthly benefit for life.

Imagine you lose your job in your early 60s and can’t find replacement work. At that point, you may have no choice but to claim benefits so your bills remain payable. Similarly, health issues could lead you to a forced early retirement — and an earlier filing age. That, too, will mean less monthly income from Social Security.

2. You may not keep earning the same wage you earn now

The estimate you get of your future Social Security benefit is based on your wages, and it will also account for certain assumptions about your future wages. But what if you end up earning a lot less for the second half of your career than the first?

It may be that you’re in a stressful job that’s harming your health. If so, you may be inclined to make a later-in-life career change that leaves you with a better work-life balance, but a lower salary. That’s not necessarily a poor choice — but it could result in lower Social Security benefits.

3. Benefit cuts could happen due to a revenue shortfall

Social Security is facing a financial shortfall in the coming years as baby boomers exit the workforce in droves, thereby cutting the program’s incoming payroll tax revenue. The program does have trust funds it can access to keep up with scheduled benefits for a while. But once those funds run out of money, benefit cuts will be on the table.

Right now, the Social Security Trustees anticipate the program’s trust funds running dry by 2035. That date could change, though. But all told, benefit cuts are a real possibility, so you can’t assume that the future benefit you’re looking at collecting will be the benefit you actually wind up with.

Be prepared

It’s a good idea to do some digging to see what sort of monthly Social Security benefit you might be in line for. But give yourself some wiggle room in case that number doesn’t come through, and compensate by boosting your savings rate. That way, you’ll be less likely to struggle financially if Social Security winds up letting you down.

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