2 Social Security Moves That Can Protect Your Retirement From Future Benefit Cuts

Social Security cuts may be on the horizon, but you can still safeguard your retirement.

The coronavirus pandemic has affected millions of Americans financially, and those nearing retirement age may be particularly vulnerable.

If you're just a few years away from retirement and your investments have been negatively affected by the COVID-19 crisis, you may need to rely on Social Security benefits for a larger chunk of your retirement income. However, Social Security is facing its own financial challenges, and there's a chance benefits may need to be reduced in the future.

The future of Social Security

The Social Security Administration (SSA) uses money from payroll taxes to fund benefits, but between millions of baby boomers entering retirement each year and retirees living longer lifespans, the SSA is paying out more in benefits than it's collecting in taxes. As a result, the SSA has had to tap its trust funds to find enough cash to continue paying out enough money in benefits. Those trust funds are expected to run dry by 2034, however, according to the SSA Board of Trustees' latest projections. At that point, the SSA will need to rely on payroll taxes to fund benefits, and those taxes are only expected to be enough to cover 76% of future benefits.

The COVID-19 pandemic could exacerbate this issue, too, because with so many people unemployed, there's not as much money coming in from payroll taxes. This could force the SSA to pull more from its trust funds to make up the deficit, which may cause those funds to run out of money sooner. In other words, unless Congress comes up with a solution soon, Social Security beneficiaries could see their checks reduced by 2034 -- or even earlier.

While you may have no control over the future of the Social Security program, there are a couple of things you can do to increase your benefits and protect your retirement from future cuts.

1. Delay claiming benefits to earn bigger checks

The amount you collect each month in benefits depends on what age you begin claiming. In general, the earlier you claim, the less you'll receive each month. You can file for benefits as early as age 62, but by claiming before your full retirement age (FRA) -- which is either age 66, 67, or somewhere in between, depending on the year you were born -- your checks will be reduced by up to 30%.

You can also delay claiming benefits, though, which will result in bigger checks each month. For every month past your FRA that you wait to file for benefits (up to age 70), you'll receive extra cash. If you have a FRA of 66 years old and you wait until age 70 to file for benefits, you'll collect your full benefit amount plus an additional 32% each month.

The best part about this boost in benefits is that it's for life. So no matter how long you live, you'll continue receiving extra money each month if you delay benefits. And this money can go a long way if benefits are cut in the future and you don't have as much as you thought you would in savings.

2. Work at least 35 years to boost your basic benefit amount

Your basic benefit amount -- or the amount you'll receive if you start collecting benefits at your FRA -- is based on your average earnings over the 35 highest-earning years of your career. If you work fewer than 35 years, you'll have zeros added to your average to account for the years you didn't work, which will lower your average and result in less money in benefits.

To collect as much as possible from Social Security, first make sure you've worked at least 35 years before you begin claiming. To further increase the size of your checks, you may choose to work a few years longer. You're likely earning more per year now than you were 35 years ago, so by working longer, you can boost your earnings average by replacing some of your lower-earning years with more recent higher-earning years. You may also choose to pick up a side hustle to increase your income even more, which can also result in bigger checks.

The higher your earnings average over 35 years, the bigger your basic benefit amount will be. Then if you also delay benefits past your FRA, you can receive even more each month.

If you're expecting to rely on your Social Security benefits for a good portion of your retirement income, future cuts could affect your senior years. By taking steps to increase your benefits, however, you can ensure you're doing everything possible to enjoy a comfortable retirement.