Suddenly, Social Security's future is worrying everyone. And that's an issue. Social Security is a key source of retirement income for nearly 72 million Americans.
Much of the angst around the nation's retirement safety net surrounds the Trump Administration's push to lower costs to administer Social Security benefits. The White House plans to reduce the Social Security Administration's (SSA) job count by 7,000, or 12%. And it plans to close nearly four dozen agency offices that Americans use to apply for benefits, ask questions or resolve issues.
The most alarming potential fallout is an interruption in benefits. That's a risk if the outdated Social Security computer system fails. A large number of workers who know the system's inner workings are leaving the agency, warns Martin O'Malley, the SSA commissioner during the Biden Administration.
DOGE And Social Security
The Trump Administration on March 11 reiterated that it "will not cut Social Security." It also said Elon Musk's Department of Government Efficiency (DOGE) is cutting "waste and fraud" in the entitlement program, not the benefits. DOGE is working to correct beneficiary records of Americans 100 or older to make sure the deceased are not receiving benefit checks.
Still, Social Security experts say Americans should prepare for the fallout of the budget cuts. The cuts are straining an agency that was already at a 50-year-low in staffing. And all this comes at a time when Baby Boomers are retiring in record numbers, according to O'Malley.
With fewer workers and agency branches, Americans should expect delays when interacting with Social Security, says Matthew Allen, cofounder and CEO of Social Security Advisors. The firm advises Americans on maximizing their Social Security benefits.
"One thing people need to be prepared for is even longer wait times, whether it's at a Social Security office or on the phone," said Allen.
Adding Barriers
Social Security already added an extra hurdle to meet face-to-face with a Social Security agent by requiring an appointment, says Allen. O'Malley told NPR the agency's speed to answer phone calls fell to 12.5 minutes. But wait times have shot up recently to more than 30 minutes.
For now, cutting the fat and waste at Social Security doesn't mean cuts in benefits, says Allen. "There haven't been any real credible threats, at least as of now, targeting actual benefits," said Allen.
Chuck Czajka, Certified Social Security Claiming Strategist (CSSCS) and founder of Macro Money Concepts, says fears of Social Security benefit cuts, especially for those already receiving checks, are overblown. Social Security remains the best annuity for retirees.
"As far as Social Security goes, it's too big to fail," said Czajka. "Whatever happens, they're going to get their checks." As a result, Czajka adds, Americans should not panic and take benefits as early as 62, as it results in 25% smaller benefit check.
"It's a lot of political talk," said Allen. "So, don't jump to conclusions and say, 'Well, I'm just going to turn my benefits on.'"
Cool Heads Prevail Over Social Security
It's still vital to make claiming decisions based on your age and income. And if you're married, you must coordinate your benefit with your spouse to maximize spousal benefits.
Social Security remains a key part of Americans' retirement planning. More than half (53%) of Americans who haven't retired yet say they expect to rely on Social Security benefits to pay their necessary expenses once they retire, according to a Bankrate Social Security survey. But at the same time, 73% are concerned that promised Social Security benefits won't be paid to them upon retirement age.
And a report released in January by the National Institute on Retirement Security (NIRS) found that only 4% of Americans say Social Security "will not be important to their income in retirement."
The Americans who are likely to feel the staffing crunch the most are those looking to start up Social Security benefits for the first time and get their first check, says Allen. The reason: The sign-up process still requires processing by humans, says Allen.
"New claimants will feel the biggest impact from a processing standpoint," said Allen. "If there are staff cuts at the levels they're talking about, that is definitely going to slow down the process of getting a claim through."
File For Social Security On Time
The SSA allows Americans filing for Social Security benefits for the first time to do so four months in advance of when they want to start receiving benefits.
Czajka recommends that Americans get their initial applications in sooner rather than later. To be safe, take advantage of the full four-month window. So, if you want to start benefits in July, file for benefits in March. Normally, it takes about 30 to 60 days to process a new recipient. But it could take longer due to fewer workers.
"I would probably rush down there and do my application as fast as I could," said Czajka. "Because that could be delayed a little bit before I get my first check."
Better safe than sorry, adds Allen. "If we start to see major disruptions, we could get into a scenario where somebody is retiring from their job, claim their Social Security benefits, and thought they were going to have money coming in (on a certain date) and suddenly don't," said Allen.
There's also a real threat that, due to computer system issues, Americans already receiving Social Security checks each month could experience a delay in receiving their checks.
"I do think it's realistic that we could see unintentional benefit pauses or disruptions," said Allen, adding that he doesn't think there's been enough study on how to manage the downsides if a benefit disruption were to occur.
What If There Are Delays?
If checks go out late, mayhem is likely. Expect outrage and protest.
"People are going to get very agitated very quickly. It's kind of an equivalent of a nuclear bomb going off for seniors affected," said Allen. "I've been saying that if something happens to Social Security benefits, it's going to make January 6 a few years ago look like child's play. It's going to be a mess and trying to get it turned back on will probably be nearly impossible."
To avert these negative outcomes, Allen advises Americans to restock their emergency fund. They should also reach out to their representatives in Congress and pressure them to take action to prevent any system outages.
Trump's promises to do away with taxes on Social Security benefits as well as tips and overtime will be short-term benefits. But less revenue coming into the entitlement program comes with long-term consequences. It could push forward the date by a few years at which the $2.8 trillion Social Security trust fund can no longer pay out full benefits, experts say. The Social Security 2024 annual report estimated that the trust fund would run dry during 2033.
"Whether you're collecting benefits now or expect to in the future, Trump's Social Security agenda could reshape how the program functions and how much you ultimately receive," said Rachel Christian of Bankrate.
Do This Now With Social Security
Given the chaos currently surrounding Social Security, experts recommend doing a few things now. Now is the time to set up an online Social Security account so you get an idea of what your benefit would be at full retirement age of 67 and other ages. Also check if earnings recorded in the system for all years are accurate, says Czajka.
And if you're close to retirement, Czajka says start planning now to determine the optimal claiming strategy for you, and if you're married, your spouse.
