Social Security Might Cut Your Benefit, But You Can Still Snag a Higher One by Doing This

At this point, Social Security cuts are something current and future retirees alike might have to brace for. In the coming years, the program expects to owe more money in scheduled benefits than it collects in payroll taxes (its primary revenue source) as baby boomers close out their careers in droves.

Social Security has trust funds it can tap to keep paying scheduled benefits for a while. But once those trust funds are depleted, benefit cuts may be the only choice.

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As of now, Social Security’s trust funds are expected to run dry by 2034. So that gives lawmakers only about 10 years to come up with a way to avoid benefit cuts. It also means that if you expect Social Security to be a big source of retirement income for you, you may need to make some financial adjustments sooner rather than later.

That said, there’s one key step you can take to help make up for Social Security cuts and snag a decent-sized benefit. But it’s a move you’ll need to commit to ahead of time.

You can delay your filing for a higher benefit

You’re entitled to your full monthly Social Security benefit based on your lifetime wages once you reach full retirement age, or FRA. FRA is 67 for anyone born in 1960 or later.

But for each year you delay your Social Security claim past FRA, your benefits grow 8%. This incentive runs out at age 70. But what it means is that if you’re looking at a FRA of 67 and don’t sign up for Social Security until your 70th birthday, you’ll grow your benefits by 24%. That’s a great way to make up for Social Security cuts.

However, a delayed filing is something you need to plan for — not say you’ll do on a whim. You might, for example, have to commit to developing job skills in your 60s to help ensure that you’re able to keep working until age 70 to make a delayed Social Security filing possible. You might also need to boost your nest egg so that if you do lose your job in, say, your mid-60s, you’re able to hold off on claiming Social Security until you’ve reached the point where your monthly benefits are boosted.

But if you like the idea of snagging a higher monthly paycheck for life, then delaying your Social Security claim is a smart bet. You never know how long your savings will last in retirement. But if you lock in a higher Social Security benefit, you can get an income boost that makes up for a dwindling nest egg.

Unfortunately, it’s becoming clearer by the day that lawmakers don’t have many great options for preventing Social Security cuts. This doesn’t mean that those cuts are absolutely set in stone, but it does mean that it’s time to come to terms with them. Thankfully, you can help make up for a reduced benefit by waiting to claim yours as long as possible.

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