AARP Says Too Many Retirees Get This Social Security Choice Wrong

Few retirement decisions have a bigger impact on your long-term income than Social Security. When you claim benefits, how you coordinate them with other income, and what you expect from the program over time, can shape your financial security for decades. Yet many retirees and near-retirees misunderstand how Social Security actually works, especially when it comes to what happens if the program's trust funds run short.

According to AARP, confusion around the projected Social Security trust fund shortfall is leading many people to make retirement planning decisions based on fear or incorrect assumptions. That misunderstanding can affect when you claim benefits and how confident you feel about your retirement income.

Common Social Security misunderstandings

AARP points to a widespread misunderstanding about the future of Social Security benefits if the trust funds are depleted. Many retirees believe that benefits will disappear entirely or that Congress will fix the problem without any changes to payouts.

Neither assumption is accurate. Current laws require Social Security benefits be reduced to match the inflow of related tax money. And Congress has not shown any serious efforts to reform Social Security taxes, income levels, or other factors to prevent this from happening.

Misunderstanding how Social Security benefits will be impacted can influence when you choose to claim benefits, and many seniors are choosing to claim benefits earlier than they otherwise would to get as much as they can before "Social Security runs out of money."

What AARP says about the trust fund shortfall

AARP has repeatedly warned that confusion about trust fund depletion is driving unnecessary anxiety. According to AARP's analysis of the Social Security Trustees' projections, the combined retirement and disability trust funds could be depleted around 2034 if no changes are made.

That does not mean Social Security stops paying benefits.

Instead, payroll tax revenue would still cover approximately 75% to 80% of scheduled benefits, according to both AARP and government projections.

AARP's concern is that many retirees mistakenly assume that claiming earlier will protect them from future cuts. However, the irony here is that claiming early permanently reduces monthly benefits by up to 30%.

How Social Security actually works if the trust fund runs short

Social Security is funded primarily through payroll taxes. Even if the trust funds are depleted, those tax revenues continue to flow in.

According to the Social Security Administration, ongoing revenue would still be sufficient to pay the majority of benefits. However, payments could be reduced across the board unless Congress acts.

The key point is that claiming earlier does not shield you from potential reductions. However, it locks in a lower benefit for life. Claiming benefits early won't undo that choice, even if Congress acts to fix Social Security at some point in the future.

The common misconception and why it matters

The most common misunderstanding is believing that Social Security will "run out" completely or that delaying benefits is risky because payments might vanish.

These fears can lead seniors to claim benefits early, which can reduce their benefits by up to 30%. If you delayed receiving benefits instead, you could actually increase your monthly checks by about 8% per year above your full retirement benefit until age 70.

No matter what age you claim benefits, future reductions would likely happen regardless of when you claimed. AARP notes that fear-driven claiming decisions often result in lower lifetime income, especially for retirees who live longer than average.

Simple example of the real impact

Imagine two retirees eligible for a $2,000 monthly benefit at full retirement age.

• Retiree A claims early at 62 and receives about $1,400 per month
• Retiree B delays until age 70 and receives about $2,480 per month

If future changes reduced benefits by 20%, both retirees would see their monthly checks reduced. However, Retiree B would still receive significantly more each month because they waited until age 70 to start claiming benefits. Compare that to Retiree A, who could be in a much worse financial situation. A 20% cut brings their monthly check down to just $1,120, which isn't enough for many retirees to live on.

Why AARP urges better understanding to avoid panicking

AARP stresses that Social Security has faced funding challenges before. Yet, Congress has always handled those challenges by passing new legislation.

The organization encourages retirees to understand how the Social Security benefits are funded and calculated rather than rushing into decisions based on worst-case assumptions. Understanding that Social Security benefits are more likely to be reduced rather than eliminated can help you make a more informed decision.

Bottom line

AARP warns that too many retirees get Social Security wrong by not knowing what trust fund shortfalls actually mean. Benefits are not expected to disappear. Instead, they'll most likely see a cut of approximately 20%.

This confusion may push people into claiming early, which could permanently reduce their income by up to 30%. By understanding how Social Security is funded, what projections really show, and why AARP urges education over fear, you can make smarter money moves to meet your needs.

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