I'm a Financial Adviser: This Is How You Can Adapt to Social Security Uncertainty
Rather than letting the unknowns make you anxious, focus on building a flexible income strategy that can adapt to possible Social Security changes like gradual benefit adjustments, a higher full retirement age (FRA) or means testing/payroll tax expansion.
The Social Security trust fund that pays benefits to retirees is projected to face a shortfall by 2033, according to the latest report from Social Security's Board of Trustees. At that point, payroll taxes would cover only about 77% of promised benefits.
The headlines sound dire, but for affluent retirees, panic isn't a plan.
Each of the fixes being debated in Washington — raising the full retirement age, reducing benefits for higher earners or increasing payroll taxes — impacts income and taxes differently.
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The best response for a retiree isn't to guess which one passes. It's to build a retirement income strategy that is flexible enough to adapt to any outcome.
Here's a look at each possible solution and how you might plan for it.
The three most likely reform paths
1. Gradual benefit adjustments for future retirees
Lawmakers are reluctant to reduce benefits for those already receiving Social Security. More likely is a phased reduction or slower cost-of-living adjustments (COLAs) for future retirees, similar to proposals analyzed by the Congressional Budget Office.
Even a modest 5% to 10% benefit reduction could trim lifetime payouts by more than $100,000 for higher earners who live into their 90s.
How you can plan: If you are still working or delaying benefits, stress-test your plan for smaller payments starting at age 70 or later.
Coordinate your claiming age with your tax strategy to avoid the "widow's penalty," when a surviving spouse moves from married to single filing status and pays higher taxes on less income. You can learn how to avoid it in the Kiplinger article How One Widow Nearly Missed Out on $213,000 in Social Security.
2. Higher full retirement age (FRA)
A realistic reform is nudging the full retirement age upward for younger people, as Congress did in 1983 when it raised FRA from 65 to 67 and phased it in over decades for future retirees.
Similar proposals today also phase changes in gradually by birth year.
If FRA ultimately moved to 68, a retiree still claiming at 67 would be filing 12 months early, about a 6.7% reduction under current rules.
If FRA moved to 69, claiming at 67 would be 24 months early — about a 13.3% reduction.
The last time FRA changed, the law was enacted slowly over a 22-year phase-in, which is a fair planning assumption now.
How you can plan: Maintain your options with bridge income so you can delay claiming if the rules change. Cash reserves, a taxable brokerage or withdrawals from retirement accounts can cover living costs while you wait.
Choosing which account to tap in which year is a key lever for managing Medicare's IRMAA surcharges and future required minimum distribution (RMD) exposure, especially in years when income would otherwise spike. (Use your plan's scenario model to test "FRA + one year" and "FRA + two years" cases alongside IRMAA brackets.)
3. Means testing or payroll tax expansion
If Congress pursues "means testing," higher-income retirees could see reduced benefits, while those earning over $400,000 might face payroll tax reinstatement on income above that level.
These changes would effectively raise the marginal tax cost of additional earned income in retirement.
How you can plan: Take advantage of today's historically low federal tax brackets, set by the One Big Beautiful Bill Act (OBBBA) and in place until Congress changes them.
Now is a critical window for Roth conversions. Consider using this window to make modest Roth conversions each year, often between ages 59½ and 73, to fill the lower tax brackets.
Converting strategic amounts annually can shrink future RMDs, reduce IRMAA surcharges and build tax-free income flexibility if benefits are taxed more heavily later.
A case study: The 'future-proof' plan
Consider a couple, both age 62, with $1.2 million in IRAs, $400,000 in a taxable account and $60,000 in annual spending needs.
If they claim Social Security at 62, they'll receive roughly $42,000 per year. If they delay until 70, their combined benefit grows to about $74,000.
We modeled three possible outcomes:
- No policy change. Lifetime Social Security benefits total about $1.9 million
- 10% benefit reduction beginning in 2033. Lifetime benefits fall to $1.7 million
- Targeted reform (reduced COLA or means-testing for higher earners). Lifetime benefits land near $1.65 million, depending on income thresholds
By covering the eight-year delay from their investable accounts and layering $50,000 to $100,000 in annual Roth conversions, they can lower future RMDs, reduce IRMAA exposure and preserve flexibility across any policy outcome.
Behavioral guardrails that matter
- Keep fixed costs low. Flexibility starts with manageable expenses. Housing and health care absorb the largest shares of retiree budgets.
- Diversify tax sources. Aim for a blend of taxable, tax-deferred and tax-free accounts so you can control your effective tax rate each year.
- Plan in what-ifs. Ask your adviser to model multiple policy outcomes — reduced COLAs, higher FRA or partial means testing. Seeing the numbers reduces anxiety and increases confidence in your long-term strategy.
A 20% across-the-board cut may grab headlines, but it's politically improbable. Smaller, targeted adjustments are more likely and manageable for retirees who plan ahead.
The next decade is a rare window to reshape where your income comes from and how it's taxed.
Related Content
- Six Changes Coming to Social Security in 2026
- I'm 62 and Worried About Social Security's Future. Should I Take It Early?
- How Much Would Social Security's 2033 Shortfall Cost You?
- When Will Social Security Run Out of Money? And Medicare?
- What Is the Average Social Security Check by Age?
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