Should you count on Social Security?

An individual’s Social Security benefits are often a key part of retirement planning, but there’s much concern—and confusion—around Social Security’s future viability.  

Many headlines raise concerns about solvency, leading some Americans to claim benefits early out of fear they’ll disappear. But is that the right move? Let’s tackle some common questions.

1. Is Social Security going bankrupt?

No, but changes may be needed. The Social Security Trust Fund is currently projected to be depleted by 2035. Even if that happens, however, payroll taxes are estimated to cover about 80% of projected benefits. Congress has historically stepped in to make necessary adjustments, and it’s unlikely they’ll let the program collapse.

2. Should I claim Social Security early before it runs out?

Not necessarily. Claiming benefits before your full retirement age results in a permanent reduction in benefits—up to 30% lower if you claim at 62 instead of waiting. Unless a recipient truly needs the income from Social Security, it’s often better to wait and receive a larger check for life.

Let’s consider a worst-case scenario in which the Trust Fund is depleted and benefits are reduced to 80% in 2035. That’s still a higher payout than would be achieved by claiming as early as possible and taking the guaranteed 30% reduction. Making a fear-based decision now could mean locking in a lower benefit for life rather than adapting to potential future changes. 

3. What happens if I wait until 70 to claim benefits?

An individual’s monthly benefit increases roughly 8% per year past full retirement age and maxes out at age 70. If other income sources are available, waiting to claim at age 70 can significantly boost your lifetime Social Security payments.

4. Are Social Security benefits taxed?

At least the first 15% of benefits are tax-free. Up to 85% of Social Security benefits may be taxable if a taxpayer’s total income exceeds certain thresholds. Individuals should plan for this in their retirement income strategy.

5. How does recent legislation impact Social Security?

As of January 2025, the Social Security Fairness Act repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). This change primarily benefits individuals with a pension from non-Social Security-covered employment, such as government workers and teachers, who previously saw reductions in their benefits. Adjustments to payments are expected to be retroactive to January 2024, though implementation may take time.

6. What happens to Social Security if I keep working in retirement?

If claiming benefits before full retirement age while still working, a portion of Social Security benefits may be temporarily withheld depending on earnings. Once at full retirement age, there’s no penalty, and benefits may be recalculated to include additional earnings.

7. Will Social Security be around for younger generations?

Most likely, yes. While adjustments such as raising payroll taxes or adjusting benefit amounts may be necessary, Social Security is deeply ingrained in American retirement planning. Complete elimination is highly unlikely.

8. How is Social Security adjusting for inflation?

Benefits are adjusted annually through cost-of-living adjustments (COLAs). In recent years, inflation has led to some of the largest COLA increases in decades, helping retirees keep pace with rising costs.

9. Can I rely solely on Social Security for retirement?

For most people, no. Social Security was designed to replace only a portion of pre-retirement income. It’s best used as part of a broader retirement strategy that includes savings, investments, and other income sources.

10. How do I decide when to claim Social Security?

The best claiming strategy depends on your financial situation, health, and other income sources. Consulting a financial advisor can help you make an informed decision that maximizes your long-term benefits.

Final thoughts

Social Security isn’t likely to go away, but smart planning can help one maximize benefits. If you have questions about how to maximize your Social Security benefit, reach out to your Vista team.