Social Security has served as a foundational piece of retirement income for nearly 90 years. But as the population ages and the system faces growing financial strain, many are wondering: “Will it still be there for me?”
The short answer is—probably, yes. But perhaps not in its current form. That’s why it’s important to understand Social Security’s role within a broader, flexible retirement strategy—especially for those approaching retirement in the next decade.
A System Under Pressure
When the program launched in 1935, there were 42 workers for every retiree. Today, that number is fewer than 3. This shift—driven by longer life expectancies, lower birth rates, and a growing retiree population—has put tremendous pressure on the pay-as-you-go structure.
Unless reforms are made, the trust fund that supports Social Security is projected to be depleted by 2034. At that point, payroll taxes are expected to cover roughly 78% of scheduled benefits. That doesn’t mean Social Security will disappear, but it does mean adjustments may be necessary. And while political solutions have been proposed, agreement has proven difficult.
Planning in the Face of Uncertainty
Given this landscape, it makes sense to plan conservatively. For those in or nearing retirement, the decision about when to claim benefits is key. Claiming early at age 62 locks in a lower monthly amount for life. Delaying benefits, especially until age 70, can increase monthly payments by about 8% per year after full retirement age. This often results in higher lifetime benefits, particularly for those who live into their 80s or beyond.
The value of delaying benefits, though, depends on how income needs are met in the meantime. Some retirees choose to use withdrawals from their investment portfolio to "bridge the gap," allowing them to hold off on claiming and maximize future payments. This strategy can be especially beneficial for married couples, since the higher earner’s benefit often determines the survivor benefit.
Tax considerations also matter. Depending on your income, up to 85% of your Social Security benefits may be taxable. Thoughtful planning around withdrawals from IRAs, Roth accounts, or other sources can help manage your tax exposure and preserve more of your income over time.
And for those still several years away from retirement, the best approach may be to view Social Security as a supplemental source of income—not the foundation. Assuming reduced benefits in your long-term projections can provide a more conservative, resilient roadmap.
Finally, it’s worth staying informed. Policy changes could impact benefit formulas, retirement age thresholds, or payroll tax caps. Being aware of shifts as they happen allows you to adapt your strategy with minimal disruption.
Perspective Matters
Social Security has faced funding challenges before, and it’s likely some form of reform will emerge in time. But rather than counting on policy outcomes, the better path is to build a retirement plan that doesn’t depend too heavily on any one source of income.
By understanding how Social Security works—and how it fits into the bigger picture—you can make more informed decisions and approach retirement with greater clarity and confidence.
