What if Social Security Benefits are Reduced?

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Many people talk about Social Security benefits being reduced, but very few have taken the time to figure out what that means for them – in real dollars. The Social Security Trust Fund is projected to run out in 2034.

A possible scenario is that Congress may delay the beginning date and/or full retirement age for younger workers. This would only make sense, as the Heritage Foundation report that anyone below the age of 52 today is on track to receive only 75% to 80% of their scheduled benefits. 

Reduction of Social Security benefits is also an issue for those who have already retired. Someone who retired in 2019 will have benefits cut starting at age 78. What would this mean for the present day retiree? How does this change the face of retirement?

If you are a high earner, what does it mean if we see a 30% reduction in 2035?

Let’s say you retired at age 60 in 2019. According to projections, you will begin to see benefits reduced in 15 years at age 78. Supposing that they started out with $1.5MM saved, how would they be impacted by the reduction further down the line?

The analysis below reflects what your Social Security benefit will look like in 2035 after a potential 30% reduction, and compares it to what the going amount would be if such a change were not to occur.

Those of us planning on having a dignified retirement will have to start to take action now. If you are in the midst of contemplating your Social Security benefits and would like to examine them with more clarity, please contact jcarlton@royalnj.com to discuss.


The Heritage Foundation. (2019, August 24th) What Social Security’s Shortfall Means for You. Retrieved from https://www.heritage.org/social-security/commentary/what-social-securitys-shortfall-means-you

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