We May Be Only 10 Years Away From Social Security Cuts. Make These Moves to Prepare.

It’s a scary thought, so the sooner you make a plan, the better.

If you’re worried that Social Security is in danger of disappearing completely, here’s some reassuring news: The program is not on the verge of total collapse. In fact, Social Security gets the bulk of its funding from payroll taxes. So as long as we have an active labor force, the program can continue to pay benefits to some degree. But in time, that degree may not be the same degree as it is today. Social Security’s revenue is expected to shrink as baby boomers exit the workforce in droves as they reach retirement age. Once that happens, the program will need to tap its trust funds to keep up with scheduled benefits. Those trust funds, however, will only last so long. Recent projections by the Social Security Trustees have those funds drying up in 2034, which means that at this point, we may be only 10 years away from benefit cuts. Clearly, that’s not an optimal situation. But a 10-year heads-up is a pretty lengthy one. So whether you’re retired or not, you do have a prime opportunity to prepare for Social Security cuts as best as you can.

If you’re still working

If you’re still working and collecting a paycheck, the best thing you can do to prepare for Social Security cuts is boost your retirement savings rate. If you’re currently funding your IRA or 401(k) plan to the tune of $300 a month, make it $350 or $400 a month. And also, make sure you’re investing your savings aggressively if time allows for that. If you’re at least five years away from retirement, aim to keep the bulk of your long-term savings in the stock market, whether by maintaining a portfolio of individual stocks or broad market index funds. If you’re within half a decade of retirement, it may be time to start shifting over to more stable investments, like bonds. But either way, every extra dollar you’re able to save and invest in the near term buys you more financial breathing room in the long term. So if your efforts allow you to boost your total retirement savings by, say, $100,000, that’s a great way to compensate for a smaller Social Security benefit down the line.

If you’re already retired

If you’re currently retired, you might assume that it’s too late to build more savings. But that’s far from the truth. If you can handle part-time work, it’s a great time to turn to the gig economy for an income boost. The money you earn is cash you can save, and even invest, to make a reduced Social Security benefit easier to absorb in the future. Another option? Start making spending cuts now. If you’re hanging on to your home because it’s paid off but it’s very expensive to maintain, consider downsizing. And if you can part ways with your vehicle and rely on public transportation instead, do that. The sooner you start reducing your spending, the sooner you can start banking extra money that’s apt to come in handy if you’re looking at less income from Social Security.

Benefit cuts aren’t a given

It’s definitely a good idea to do what you can to prepare for Social Security cuts, whether you’re still in the midst of your career or your retirement is well under way. That said, you should also know that while Social Security cuts are a possibility in about a decade’s time, they’re also not guaranteed to happen. Lawmakers have been working on different solutions to prevent benefit cuts. And while the clock is ticking down, there’s still time to come up with a way to allow Social Security to continue paying scheduled benefits in full. So while it’s smart to prepare for benefit cuts just in case, you also don’t have to assume that your Social Security is automatically going to get slashed.