You Should Have A Plan In Case Social Security Is Cut: Here’s Mine

Americans are commonly advised to save for retirement so they have income to rely on other than Social Security. But a lot of people don’t manage to rise to the challenge.

Sometimes, it’s not their fault. Lower-income workers are struggling to cover their bills as inflation remains stubbornly elevated. For someone who can barely put food on the table, saving for retirement may not be possible.

Prepare for Social Security cuts

Social Security gets most of its revenue from payroll taxes. But in the coming years, baby boomers are expected to retire in large numbers. That’s going to take critical revenue away from Social Security.

Plus, it’s not just that boomers will be retiring. They’ll also be claiming Social Security themselves.

To be clear, they deserve to do this. They paid into the system throughout their careers for the promise of benefits, and that’s what they should get.

But Social Security won’t be able to keep up with scheduled benefits forever if lawmakers don’t find a way to pump more money into it. The program can raid its trust funds to pay benefits for a while as needed. But once those trust funds run out of money — which could happen in about 10 years — benefit cuts may be inevitable. So it’s important to have a backup plan.

How I intend to cope with Social Security cuts

It’s not set in stone that Social Security will have to cut benefits. In this case, I think it’s a good idea to embrace the worst-case scenario and plan for it.

My backup plan is simple. I’m saving for retirement, even if it means cutting back in other area to make that happen.

Do I love driving a 10-year-old car whose doors don’t always open when I want them to? No, not really.

But since that car is still running, driving it probably saves me anywhere from $500 to $700 a month compared to the cost of taking on a car payment for a new vehicle. So my plan is to drive that car into the ground and bank the money I’m not spending.

I also don’t always love making time in my busy schedule to shop for groceries and cook. But since it probably saves me $200 a week compared to ordering takeout for every meal, I do it. That, too, is money that can go into my retirement savings.

But building a nest egg isn’t my only backup plan for Social Security cuts. I’m also telling myself that if need be, I’ll just work in retirement.

To be clear, I don’t necessarily think this is a bad thing. I’m someone who likes to keep busy. And I think working in some capacity is a good thing for my mental health. But even if I change my tune and decide I’d rather not work in retirement, ultimately, I’ll force myself to be open to it if I need the supplemental income.

Your backup plan for Social Security cuts could look different than mine. Maybe you’ll move in with your adult children to save money on housing. Or maybe you’ll sell your family business.

But either way, it’s important to have a plan just in case. We can hope for the best with Social Security. But it’s important to prepare for the worst.