What To Do If Your Social Security Payment Drops 24%?

Social Security will “run out of money” in 2032, according to the Social Security Administration’s annual Trustees Report. It won’t really run out of money. Benefits, however, will drop by about 24% to keep the funds solvent (this will vary somewhat state to state). One analysis shows that across the country, the drop will be about $550 per recipient per month. To some extent, that will vary by how much people paid in and whether they take their benefits early. And that depends on whether people elect to take their payments at 62 years old, 65/66 years old (known as “full retirement age”), or age 70.

How much people are affected is determined by what percentage Social Security is of their entire retirement income after the payments begin. “Without Social Security, 23.5 million more adults and children in the United States (including Puerto Rico) would be below the poverty line according to the Center on Budget and Policy Priorities (CBPP).

For people who lose $550 a month and rely on Social Security for a large amount of their income, taking action is critical. Most of the suggestions come from what you can do before you actually retire.

First among the suggestions is to take Social Security at age 70, which will boost the monthly payout. After “full retirement,” those who wait get a bump of as much as 8% per year.

Another suggestion is to save money as early as possible before taking the benefits. And, for defensive purposes, diversify these investments as much as possible.

Yet another option is other government programs. People qualify for these across a large number of reasons. These can include (SNAP, MSPs, LIHEAP, Extra Help). People should investigate whether they might qualify as early as possible.

Another thing people should track is whether the cut will drop their payments by 24%. Congress may “solve” the problem, but it may not solve the issue entirely.

The really bad news for people already being paid is that the drop doesn’t have an offset.

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