Millions of retired baby boomers depend on their monthly Social Security benefits to get by. And many, along with boomers who have yet to retire but soon will, are feeling anxious now, worried that these crucial benefits could be reduced or even entirely wiped out by President Donald Trump’s administration, which has already made cuts to the Social Security Administration in the form of staff layoffs and office closures carried out by DOGE.
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Do boomers have good reason to be worried about the state of Social Security? GOBankingRates spoke with financial experts to find out.
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There’s No Denying It, Social Security Is Running Out of Money
Not even the most determined optimists can deny the glaring truth of this matter: The Social Security fund is running out of money. This isn’t a new problem — and for years, politicians have been well-aware of just how dire things are — but the problem is becoming more urgent.
“The program’s trust fund is likely to run out of money in 2035, according to the Social Security Administration, which could lead to benefit cuts of 20% to 25% if Congress fails to intervene,” said Seann Malloy, founder and managing partner at Malloy Law Offices, LLC. “For someone earning, say, $1,800 monthly, that’s a potential loss of $360-$450 — real money if you’re on a fixed income.”
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Social Security Was Not Designed for the Massive Boomer Influx
Why is Social Security in an insolvent place? How did it get to be this way when it seemed to be functioning fine for so long?
Essentially, the system got overloaded by the sheer amount of boomers claiming benefits. It’s more demand than the system can handle.
“When Social Security began, we had large families, shorter life expectancies, and plenty of workers paying into the program for each retiree as each generation was typically larger than the one that came before it,” said Lily Vittayarukskul, CEO and co-founder of Waterlily. “Today, the massive baby boomer generation is drawing benefits while fewer younger workers are paying in.”
Don’t Lose Sleep Over It, but Don’t Ignore It
Malloy said he’s seen clients panic over the idea of running out of money in retirement should Social Security benefits get cut. His advice? Don’t lose sleep over it, but don’t ignore it, either. If you’re looking for some reassurance, consider that we’ve been in Social Security funding crises before — and gotten through.
“Social Security has been fiddled with in the past — remember Reagan and the Congress in ’83?” Malloy said.
Malloy was referring to the taxation of Social Security that began in 1984 following the passage of amendments signed into law by President Ronald Reagan in 1983. As a result of these amendments, a new rule was issued: Up to 50% of Social Security benefits could be added to taxable income, if the taxpayer’s total income exceeded certain thresholds.
“I have no doubt that lawmakers will come up with a solution, whether it’s tweaking payroll taxes or adjusting benefits,” Malloy said. “That said, I encourage boomers to plan wisely.”
Be Proactive With Your Retirement Financial Planning
Social Security will not always work the way it does now. Something will change. And it will likely be major. Neither boomers nor younger generations should be complacent and just wait for a new reality. We must be proactive and get aggressive with our financial planning.
“Talk with a financial adviser and max out your 401(k) plan or IRA contributions now,” Malloy said. “Even $200 a month can add up to a lot by the time you’re retirement age.”
Malloy also recommended that you diversify your income with a side hustle or an investment rental property, review your Social Security statement annually to estimate benefits accurately and stay informed.
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This article originally appeared on GOBankingRates.com: Should Baby Boomers Really Be Worried About the State of Social Security? Experts Weigh In
