Here's Why I Expect Less Money Out of Social Security (and It's Not the Reason You Think)

There are rumors flying that Social Security is running out of money. And they're not exactly true, but also not exactly false.

Social Security is not in danger of running out of money completely. But in the coming years, it expects to owe more in benefits than it collects in revenue.

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A big part of the reason boils down to the fact that baby boomers are retiring in masses. Social Security's main funding source is payroll taxes, so a shrinking workforce means the program is looking at a revenue shortfall.

Social Security can tap its trust funds for money to keep up with benefits for a good number of years. But once those trust funds are emptied, Social Security may have to cut benefits broadly unless lawmakers come up with a solution that prevents that.

And to be clear, lawmakers will probably try their best to prevent Social Security cuts to avoid a mass poverty crisis among older Americans. But there's no guarantee they'll be successful, which is why benefit cuts are something every worker today should brace for.

But while you may have to resign yourself to getting less money out of Social Security due to broad benefit cuts, I'm resigning myself to smaller monthly benefits for a completely different reason. And frankly, it's a situation that's completely my fault.

Why I anticipate getting less Social Security

Sweeping benefit cuts could easily result in smaller Social Security checks each month for me. And that's not something I can control.

What I can control is when I file for benefits. And right now, I'm learning toward claiming Social Security at 62.

The thing is, though, I'm not entitled to my complete monthly Social Security benefits without a reduction until age 67, which is full retirement age for anyone born in 1960 or later. Filing for Social Security at 62 will reduce my monthly benefits by 30% off the bat.

Now, you may be wondering, "Why on Earth would you do that?" And to be fair, there was a time when I never would've considered claiming Social Security so early.

Then I saw my father-in-law pass away earlier this year out of the blue. He was a healthy man in his 70s who ate well and ran marathons. It was a wake-up call to not put off the things you've always wanted to do -- and to not take a gamble on Social Security.

I actually have no idea when my father-in-law claimed Social Security. But based on when he passed away, an early filing at 62 probably would've put the most amount of money in his pocket on a lifetime basis.

It made me realize that filing for Social Security at 62 could be the right choice for me. While doing so means shrinking my monthly benefits for life, I think it's a move that could give me more peace of mind. And you might feel the same.

Think through your filing age carefully

I've flip-flopped on my Social Security filing age through the years, so my decision to sign up at 62 isn't set in stone. Rather, it represents where I'm at today.

This decision is also based on the fact that I've been saving aggressively for retirement in the hopes that Social Security will be a secondary income source for me, not a primary one. If you're in a different boat, and you'll truly need those monthly benefits to cover your basic living costs, then you may want to think twice about slashing them on a monthly basis -- especially with the potential for broad cuts to happen regardless of when you sign up.

But as of now, I like the idea of getting my money as early as possible, just in case. I have no idea if benefit cuts will actually come to be. And I realize that the combination of an early filing and broad cuts could leave me with a pretty tiny Social Security check at the end of the day. But it's a decision that works for me based on my anticipated needs and savings, so I'm sticking with it -- at least for now.

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