You’ve probably heard the scary headlines: “Social Security is running out of money!” While that’s not completely true, there is reason to pay close attention. If you’re already retired, it’s more important than ever to be proactive, not panicked.
Let’s dissect this, what it truly implies, and what you can do today to get ready for possible Social Security cuts in 2034.
Is Social Security going broke?
No, sort of. Social Security is financed largely by payroll taxes—that is, so long as people keep working and paying into the system, there will be money to pay benefits.
But here is the rub: the trust funds tapped to supplement benefits when payroll taxes are short are predicted to be drained by 2034. Supposing that nothing has intervened by then, the government will be able to pay only 77% of promised benefits.
That’s not zero—but it’s a substantial reduction. So Social Security isn’t going away completely — but monthly benefits might get smaller unless Congress intervenes to plug the hole.
What can retirees do now?
If you’re already retired, you can’t turn the clock back and tuck some more away — but you can take steps to stretch your cash. And watch out.
Here are three things you can do today:
1. Trim your expenses where you can
Even if you already feel like you’re living on the lean side, it’s a good idea to take a look at your spending.
- Review your Medicare plan: You can change to a less costly one during open enrollment.
- Cancel unwanted subscriptions: Are you still paying for cable, streaming, or memberships that you hardly use?
- Create a budget for the month: It will reveal exactly where your money is going and allow you to make better choices and spot small savings that add up.
Small adjustments — such as eating out less often, purchasing generic items, or reducing your utility bills — can free up more money in case your Social Security benefits are reduced.
2. Consider lite or flexible work
Going back to the workplace can seem scary, but hear this — it does not have to be full-time or laborious.
- Part-time or seasonal employment: Might you work a few hours a week at a local store, library, or as a tour guide?
- Gig economy: Could you drive for a ride-sharing service, baby sit, or rent out a room?
- Hobby money: Are you a painter, baker, knitter, or tinkerer? You could make some sideline money doing something you enjoy.
Having even hundreds of dollars each month would soften the blow if benefits are reduced in the future.
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3. Think about downsizing or home equity loans
The biggest asset for a retiree is probably his or her home. If you’ve owned the property free and clear or have a lot of equity, it can help to keep you financially secure.
- Downsize and sell: A smaller, lower-cost house can put some money in the bank.
- Lower your monthly costs: Smaller houses also tend to be lower in taxes, insurance, and utility costs.
- Consider a reverse mortgage: Not for all, perhaps, but if you want to stay in your home, it can convert some of your equity into money.
Just be sure to weigh all your choices and speak with a financial advisor before making any serious decisions regarding your home.
Conclusion: Hope for the best, plan for the worst
Here’s the best news: Social Security is not “vanishing.” But unless Congress acts fast, there may be benefit reductions beginning in 2034.
The key is to act now so you won’t be caught flat-footed. Cut expenses, research alternative sources of income, and get creative on how to put your savings—and your home—to work for you.
And remember: Lawmakers can still fix the problem. But in the meantime, the smartest thing is to make plans for cuts as if they’re on their way, just in case.
Be smart, be flexible, and take control where you can — your future self will thank you.
