Social Security Benefits Could Be Headed for Cuts: Why I Refuse to Lose Sleep Over It

If you've been following the news on Social Security lately, there are probably a couple of different items hitting your radar. One might be speculation about the upcoming cost-of-living adjustment, which can't be announced until October. The other is the state of Social Security's finances.

To put things bluntly, Social Security is in big financial trouble. The program is expecting to owe more in benefits in the coming years than it collects in revenue due to an aging population coupled with a shrinking labor force. And once Social Security's Social Security's Old-Age and Survivors Insurance Trust Fund runs out, which is now expected to happen in late 2032, the program may be forced to implement a broad 22% benefit cut.

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Clearly, that's not good news. But I'm doing my best to make sure it's not catastrophic news for my retirement finances.

Why my retirement income plan doesn't weigh heavily on Social Security

Since I've been writing about Social Security for more than a decade, I've known about potential benefit cuts for a long time. That's inspired me to focus on building a retirement nest egg so I don't have to be as reliant on Social Security to cover my basic expenses once I'm forced to stop working or decide to do so willingly (the jury is out on whether I'll ever actually get to that point).

This doesn't mean I don't want Social Security or would be happy about benefit cuts. Quite the contrary -- I've paid into Social Security all my life, and I'd really like to get the monthly benefits I'm entitled to.

At the same time, I'm planning to use my retirement savings to cover my essential needs like housing, transportation, utilities, medication, and food. I'm hoping to only have to use my Social Security checks for extras like hobbies, entertainment, and travel.

Of course, I'd like to be able to do more of the things I love. But if I have to cut back because my Social Security checks don't arrive in full, that's not nearly as bad as struggling to keep the lights on or put food on the table. And for this reason, I'm not really losing sleep about potential Social Security cuts, even though the idea of that happening is upsetting.

Benefits may not be cut, but it still pays to have a backup plan

Now one thing worth noting in all of this is that Social Security has faced its share of financial challenges before. And lawmakers have never allowed the program to cut benefits on a broad scale.

There's a reasonable chance Congress will come to the rescue before Social Security is forced to actually make a sweeping benefit cut this time around, too. But that's not something I'm counting on. And you may want to have a backup plan yourself in case lawmakers don't manage to prevent cuts fully.

If you're within a decade or two of retirement and haven't saved much, you may not be able to get to a place where you don't need Social Security at all to cover your essential expenses. But you might be able to reduce your reliance on those benefits by having more savings, which should, in turn, make a cut easier to manage.

In fact, boosting your savings rate by even $50 or $100 a month might help you feel more confident about retirement in the context of Social Security cuts. So if you don't want to spend the end of your career worrying about something like Social Security that you yourself can't control, it pays to take steps to increase your nest egg so you have more options down the line.

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