Social Security benefits are often the foundation of Americans’ retirement income, especially for those with limited savings.
But the Social Security system is facing a significant financial shortfall. The Old-Age and Survivors Insurance Trust Fund, which is the formal name for the Social Security retirement benefits program, is projected to be depleted in 2033.
That doesn’t mean the program runs out of money entirely. It means the trust fund reserves, or the accumulated surplus from past decades, will be exhausted. At that point, current and future beneficiaries could see their benefits cut by 23%.
[Related:Trump’s Big Beautiful Bill: What It Really Means for Social Security Taxes]
Declining Number of Workers Relative to Beneficiaries
As workers and employers pay into the system, payroll tax revenue will continue. That revenue is expected to cover about 77% of promised benefits beyond 2033, unless Congress takes action to address the situation.
The program’s long-term financial outlook is also concerning, with a projected $25 trillion shortfall over the next 75 years. This shortfall is primarily due to demographic shifts, with a declining ratio of workers to beneficiaries.
Deciding when to claim Social Security benefits can be tricky. Should you lock in guaranteed payments early, or wait until full retirement age for a bigger monthly check?
A 2024 Senior Citizens League report shows that benefits have lost nearly 20% of their buying power since 2010, an erosion that amounts to roughly $4,440 a year. That makes the timing of your decision even more crucial than in the past.
How Much Do Americans Rely on Social Security?
According to a May 2025 Pew Research report, Social Security made up at least half of total personal income for 38.3 million people in 2022 — 63.2% of adult recipients, based on the Census Bureau’s Survey of Income and Program Participation data. For 26.5 million people, or 43.6% of recipients, it provided three-quarters of their income. And for 16.4 million recipients, or 27%, it was their only source of income.
Even retirees with more resources should factor the regular monthly benefit into their long-term plans.
Americans who have saved enough in 401(k) plans or individual retirement accounts are less reliant on Social Security income. That’s also true for the dwindling number of people with substantial pension income.
In those cases, people can often wait as long as possible to claim their benefit and develop strategies for claiming at the optimal time.
[READ: 9 Jobs That Still Offer Traditional Pensions]
Claim Early or Wait? The Math Matters
You can start collecting Social Security as early as age 62, but that permanently reduces your monthly benefit. You’ll get your full benefit if you wait until full retirement age, which is 66 to 67 in 2025 for those who haven’t claimed yet.
If you wait beyond full retirement age, your benefit increases by about 8% per year until age 70, thanks to delayed retirement credits. For those in good health or with other income sources, holding off can significantly boost lifetime retirement income. You can’t wait longer than 70 to get even more increases; age 70 is the cutoff.
For many retirees, the timing of a Social Security claim can have a lasting impact on financial stability. But frequently, that decision is made without a clear strategy.
“One of the first thoughts when someone ponders retirement is, ‘What will I get from Social Security?‘ Many don’t understand how to optimize Social Security or even how to find out what age they can get the most out of their Social Security benefit,” said Michael Knox, founder and owner of 5280 Retirement Group in Littleton, Colorado, in an email.
“The best advice I give my clients during our planning stage is to obtain an optimized Social Security plan before jumping in too early,” he added. “Why short-change yourself in retirement when you can optimize Social Security and get the biggest bang for your buck?”
When Anxiety Drives the Decision
When people become afraid of outliving their money in retirement, many don’t do the math to better understand the impact of their decision.
“Most of the time, people aren’t thinking about lifetime benefit math. They’re thinking about now,” said Peter Dunn, CEO of Your Money Line in Indianapolis, in an email.
“Inflation’s been punching their grocery bill in the face, and headlines about Social Security’s funding shortfall aren’t exactly soothing,” he added. “So when they ask about taking benefits early, it’s not because they’ve crunched the numbers, it’s because they’re nervous. Understandably so.”
Dunn said he tries to shift the conversation away from Social Security running out of money and focus instead on the retiree running out.
“Taking benefits early might soothe short-term anxiety, but it also locks in a lower monthly amount for the rest of your life. That decision needs to be strategic, not reactionary,” he said.
[Read: How to Correct Your Social Security Earnings Record.]
Understanding Long-term Costs
Retirees and even pre-retirees often claim Social Security early because they don’t understand the long-term cost of locking in a smaller monthly benefit for life. Complex claiming rules don’t help.
“Many people do not realize that they will get a lower lifetime amount from Social Security by claiming early,” said Regina McCann Hess, founder of Forge Wealth Management in Malvern, Pennsylvania, in an email.
“They just see that they have access to it and sign up,” she added.
However, once her clients see the math behind the decision, Hess said, their mindset often shifts.
“Over 20 years, claiming at 67 instead of 62 could add $259,920 in additional benefits. That is not chump change,” she said.
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Should You Claim Social Security Sooner? A Shortfall and Shrinking Buying Power Spark Urgency for Retirees originally appeared on usnews.com
