Why Social Security is falling apart

Estimated read time: 6-7 minutes

You've probably heard it by now – Social Security is set to run out of money within the next decade. When that happens, benefits will automatically be cut by 21% – unless there are radical changes.

According to Barron's, "A typical dual-income couple would lose $16,500 a year in benefits if the Social Security trust fund runs dry."

Further, "A dual-income couple with high lifetime earnings would see a cut of $21,800 a year."

What would it mean for you if you suddenly lost $16,500 or more in income every year – income you were counting on for retirement?

Why is Social Security on a crash course?

Social Security was created in a completely different world than we live in today.

It was 1935 – deep in the Great Depression. Life expectancy was only about 60 years. And Social Security was created as a program to keep Americans out of destitution if they lived a lot longer than that. The average American wasn't even expected to live long enough to claim benefits.

Today, life expectancy is nearly 80. That's 18 years after you can begin claiming Social Security benefits. That means Social Security has a lot more years of retirement to fund than it was originally designed for.

This has completely changed how the program works. When Social Security began, there were more than 40 workers for every beneficiary. Today, the ratio is 3-to-1. By 2050, there will only be 2 workers paying for every Social Security recipient.

This is important to understand.

You might have thought that the 12.4% of your income that you and your employer have contributed to Social Security your entire working life was being set aside for you. But that's not how it works.

Today's contributions fund today's benefits – with any excess going into the trust fund. But there hasn't been any excess in a long time – so the trust fund is being drained to cover each month's checks. In effect, Social Security has been living off its savings.

Once the trust fund is empty, the law says benefits must be cut. The way the laws are written, they can only pay out as much as they take in.

Here's What This Means For You

If you're nearing retirement and planning to file for Social Security soon, you're in a tough spot.

Do you assume that Congress will swoop in at the 11th hour and fix everything – planning for benefits to continue at their current levels, even after the trust fund goes broke? (If so, where does that money come from?)

Or do you create a retirement plan with contingencies for a very different Social Security situation, starting within the first 10 years of your retirement?

Imagine – it's 10 years from now. You're well into retirement and no longer working. Suddenly, your expected Social Security benefits are slashed to far less than you'd planned for and come to rely on.

That could quickly turn a comfortable retirement into a financially stressful mess.

If you prepare for that now and things work out, great. You'll just have more income than you expected.

But if you're not prepared and your Social Security benefits get cut, you could suddenly be in a world of hurt.

It's a mistake to believe Social Security will always pay out full benefits, regardless of economic conditions. Or that the government can actually prevent a reduction in Social Security benefits. The government is already in tremendous debt. Just imagine how hard it could be in 10 years for them to come up with more money.

Here's How To Get All The Benefits You Deserve

If you want to get all the benefits you deserve, you need to make a smart and strategic filing decision. And remember, you've only got one shot to get it right.

It's absolutely critical to take Social Security's troubles into account. These troubles should impact your filing decision – because they will impact your benefits.

The old strategy to delay filing for your benefits to get the biggest check may no longer make sense. Not if benefits could be cut right after you claim.

You can no longer rely on traditional, one-size-fits-all strategies. Every individual's situation is unique, and therefore requires a tailored strategy to maximize benefits.

To help you with this complex process, B.O.S.S. Retirement Solutions is offering a customized Social Security Analysis, free of charge – even if you're not a client.

This free analysis pinpoints the optimal timing to get the most net income from Social Security, while considering the tax implications on your benefits, IRA and 401K withdrawals, and other investment income, as well as the current state of the Social Security system.

This analysis has helped a countless number of families throughout the Wasatch Front avoid losing tens of thousands – if not hundreds of thousands – of dollars in lifetime benefits.

Some advisors charge hundreds of dollars for similar services. But B.O.S.S. Retirement Solutions offers this for free. Because they want to help Utah retirees navigate the complex system and find strategies that could help them maximize their income and live their best retirement.

The strategies used are especially beneficial for families who have saved at least $200,000 for retirement, and have not filed for Social Security.

To schedule your free analysis that could unlock the full potential of your Social Security benefits, request your analysis online here.

Appointments available on a first come, first served basis.

Tyson Thacker and Ryan Thacker are the CEO and President of B.O.S.S. Retirement Solutions. They are published authors of the book, The B.O.S.S. Retirement Blueprint, and they've helped thousands of area families plan for a better, more secure retirement. They are a five-time winner of Utah's Best of State Award and have six offices located throughout the Wasatch Front.

This is for illustrative purposes only, results may vary. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. BOSS submitted applications and paid application fees to be considered for the Utah Best of State for Retirement Planning awards. The award results were independently determined by the awarding organization's criteria (https://www.bestofstate.org/about.html) and the information BOSS provided in the applications. BOSS received the Utah Best of State award in 2019, 2020, 2021, 2022, and 2023. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials provided by Infinity Marketing Services

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