Financial planner advises preparing for reduced Social Security benefits

A recent analysis by the Center for Retirement Research at Boston College highlights the need for Americans nearing retirement to prepare for potentially reduced Social Security benefits, HousingWire reported.

Luke Delorme, a certified financial planner, recommends that workers test their retirement plans against a 20% reduction in expected Social Security benefits to ensure financial stability.

Delorme suggests strategies such as working additional years, delaying benefit claims, or increasing savings to mitigate the impact of reduced benefits.

The Social Security retirement trust fund is projected to be depleted by 2032, a year earlier than previously estimated, with incoming revenue expected to cover only 78% of scheduled benefits thereafter, according to the 2026 trustees report.

Despite a 3.6% cost-of-living adjustment set for January 2027, advocates argue that benefit increases do not keep pace with inflation, affecting 76 million Americans including Supplemental Security Income recipients.

Congress may consider measures such as raising the payroll tax cap, increasing the retirement age, or reducing benefits for higher-income recipients to address the funding shortfall, Delorme noted.