Why Social Security Cuts Aren’t Worrying Me — Even Though They Should

I was talking to a group of friends a few weeks ago, and somehow, the conversation veered from home repairs and vacation plans to retirement planning. Some of my friends bemoaned their almost nonexistent savings. Others shared strategies they were using to catch up.

I stayed quiet for most of the conversation, taking it all in — until the topic of Social Security came up.

At that point, a number of my friends starting discussing the fact that benefits would not be around any longer by the time our retirement rolled out.

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So I had to put on my know-it-all hat and explain that while Social Security is facing some financial difficulties, the program is not at risk of disappearing completely. The worst-case scenario being talked about right now is benefit cuts. And while those aren’t great, they’re a far cry from future retirees losing out on benefits completely.

Still, I know a lot of people are worried about Social Security cuts, from current retirees to those on the cusp of ending their careers. And I truly feel for people in that situation.

The truth is that we don’t know if Social Security will actually have to move forward with benefit cuts or not. But I’m not particularly worried about the worst-case scenario. Here’s why.

It’s a matter of Social Security’s role in my retirement

I suppose I should be worried about Social Security cuts, because the program is facing some major financial challenges that lawmakers are struggling to find solutions to. And if they can’t implement changes to make the program solvent, Social Security may have to cut benefits by about 20% or more.

But the reason I’m not getting worked up over Social Security cuts is simple — I don’t expect those benefits to play a very big role in my retirement finances.

I’ve been working extremely hard to boost my income and save as much of it as possible for retirement. (Case in point: I’m currently on my twelfth hour of work for the day as I write these very words.)

I’m not sharing this so anyone can feel bad for me. I feel blessed to be able to spend an entire day plugging away at my desk.

My point, rather, is that I’m making a solid effort to build up a retirement nest egg that can come pretty close to covering my expenses on its own. And as such, I expect Social Security to play a more minor role in my retirement finances.

That doesn’t mean I’m excited about benefit cuts. But my plan is to use Social Security for leisure only.

I want to make sure to save enough on my own to cover all of my essential expenses. And so the way I see it, if I end up with a little less money for fun activities in retirement because of Social Security cuts, I’ll just deal.

Many people, however, can’t just shrug off Social Security cuts the way I am. And that worries me.

Prepare now so you’re not thrown for a loop

Even though there’s a solid chance lawmakers will be able to prevent Social Security cuts, that’s not something anyone can count on. So what I suggest doing is following my lead to some degree and setting yourself up with plenty of savings for your senior years.

You don’t necessarily have to go to some of the extremes I go to. Not everyone wants to work 60 hours a week, and that’s fine. But for the sake of your future self, make sure you’re doing whatever it takes to save a decent chunk of money for retirement so you’re not overly reliant on Social Security down the line.

Even without benefit cuts, Social Security will only replace about 40% of your pre-retirement paycheck if you earn an average wage. But given the potential for cuts, you may want to step up your savings game, even if it means having to make some sacrifices along the way.

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