Experts Sound the Alarm on Social Security Cuts - And a Costly Mistake Retirees Are Making

Recent government reports on the future of Social Security have sparked a wave of panic among soon-to-be retirees and their financial advisers. The current projections for Social Security's retirement trust fund indicate it will run out in 2032, at which point payroll taxes and other income will cover only 78% of benefits.

This has sounded alarms across the country, with the National Association of Registered Social Security Analysts (NARSSA) reporting that 73.5% of the analysts it surveyed say clients' fear of future benefit cuts is pushing them to claim early. Nearly 59% also report that clients doubt Congress will fix the shortfall in time.

Here's the math behind the fear of Social Security running out and the costly mistake to avoid if you want a stress-free retirement.

When Social Security is projected to run out

According to the 2026 Trustees Report, the Old-Age and Survivors Insurance (OASI) Trust Fund will run out in the fourth quarter of 2032. That fund pays retirement and survivor benefits. Without congressional action, those receiving benefits will see their monthly checks cut by roughly 22%.

The CRFB estimates that these cuts will reduce Social Security payments by roughly $16,900 a year for typical dual-income couples, $12,700 for single-income couples, and up to $22,300 for high-income couples. These figures aren't adjusted for inflation, and CRFB says they'd be about 15% smaller in today's dollars.

Why advisers say claiming early backfires

NARSSA President Martha Shedden said the survey shows "how strongly fear and confusion are influencing one of the most important retirement decisions" people make. Financial planner Ray Harris put the trade-off in plain terms in a recent Fortune column. Clients who file at 62 instead of 67 to dodge a possible 22% cut, he wrote, take on "a 100% chance of a 30% cut to your monthly benefit."

For anyone born in 1960 or later, full retirement age is 67, according to the Social Security Administration. Claiming at 62 permanently reduces the monthly benefit by 30%. Waiting until 70 raises it to 124% of the full amount.

Take someone eligible for $2,000 a month at 67. They would get about $1,400 by claiming at 62, or $2,480 by waiting until 70. Claiming at 62 instead of 67 costs $600 a month, or $7,200 a year, before cost-of-living adjustments. That's a steep price for people trying to prepare themselves financially for a cut that may not come.

The 22% cut depends on whether Congress acts. If it doesn't, an across-the-board percentage cut would still apply to the early claimant's already smaller check. Filing early doesn't avoid the cut. Instead, it adds a second, permanent reduction under it.

Will Congress prevent the cuts?

Many experts expect lawmakers to step in before 2032, though they disagree on how. In a September Washington Post survey of 10 experts, several predicted no cuts at all, financed mostly by higher taxes on top earners. Others expected some reduction in benefits.

The likeliest fixes combine new revenue with changes to future benefits, the same approach Congress took in 1983, but every option is unpopular with someone. At an August Senate Finance Committee hearing, lawmakers split over whether to create a bipartisan commission to draft a plan. Some members backed proposals to lift the $184,500 cap on income subject to Social Security tax, and others opposed a commission outright.

No plan has passed, so the 22% cut remains a real risk. The advisers' point is that a permanent claiming decision shouldn't rest on a policy outcome that hasn't yet been decided.

Other gaps the survey found

NARSSA's survey also turned up rules many clients didn't know about. Each one affects how much money actually reaches their bank account.

Benefits after a divorce: About 58% of advisers said clients didn't know they might qualify for benefits on a former spouse's record, including survivor benefits. Under SSA rules, divorced people may qualify if the marriage lasted at least 10 years and they meet other requirements.

Medicare premiums: Roughly half of advisers said clients were surprised that Medicare premiums reduce their monthly Social Security payment. The standard Part B premium is $202.90 a month in 2026, and higher earners pay more. For most beneficiaries, it's deducted directly from their check.

Federal taxes: Around 35% of advisers said clients were surprised to learn benefits may be taxable. According to the IRS, part of your benefits may be taxed when your combined income exceeds $25,000 for single filers or $32,000 for married couples filing jointly.

Bottom line

Social Security's funding problem is real, but advisers keep making the same point: When to claim is a decision you live with for the rest of your life, and it's not one you should make out of fear. Before filing, compare your estimated benefits at 62, 67, and 70 in your my Social Security account. Weigh your health, your savings, and any spouse who may rely on survivor benefits.

The gap between claiming ages also grows over time. Cost-of-living adjustments are a percentage of your benefit, so the 3.6% increase coming in 2027 adds more to a larger check than to a smaller one, helping you keep more cash in your wallet for decades. If you need to change course, SSA allows you to withdraw an application within 12 months of filing, but you must repay all benefits you received.

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