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While the U.S. government continues to brag about its historic tax cuts (1), it’s staying conspicuously quiet about the impact of its policies on Social Security.
Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund is on track to be depleted by 2032, according to the Congressional Budget Office (2). That deadline has been pulled forward a year from the CBO’s last projection and two years from its 2024 outlook, per 401(k) Specialist (3).
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Part of the reason for this accelerated timeline is President Donald Trump’s signature One Big Beautiful Bill Act (OBBBA), according to the Committee for a Responsible Federal Budget (CRFB) (4). Simply put, this historic wave of tax cuts has reduced the revenue the government collects and has tightened the deadline for the trust fund’s depletion.
Unless the government acts swiftly to reform the system, all beneficiaries could face an automatic 24% benefit cut on average, based on analysis by the CRFB (5). According to their estimation, a typical retired couple could face an $18,400 cut in annual benefits.
There isn’t much you can do, at least on an individual level, to shape government policy or avert this financial cliff. But you can prepare your retirement plans for any eventuality.
Here are two ways workers and retirees can protect themselves before it’s too late.
Bolster your independent safety net
With the public safety net facing an uncertain future, boosting your own safety net could cover some of the potential gaps.
Expanding your savings and investments strategy to focus on long-term growth could be the right approach to ensure a comfortable retirement, regardless of what happens to Social Security.
You could also consider looking beyond the traditional stocks-and-bonds portfolio to add alternative assets like gold and fine art.
For exposure to gold as part of a broader inflation-hedging strategy, a gold IRA from Goldco lets you hold physical gold and other precious metals while still keeping the tax advantages of a traditional IRA.
Goldco is considered one of the top players in the space, holding a 4.8/5 rating on Trustpilot and an A+ from the Better Business Bureau. The company also runs a guaranteed buyback program, committing to repurchase your metals at the “highest price” based on market value should you decide to sell down the road.
To see whether precious metals make sense for your portfolio, you can download Goldco’s free gold and silver information guide so you can decide if it’s the right fit for you.
Another asset that can help you diversify away from stocks is fine art. In 1999, the S&P 500 peaked, and it took 14 long years to fully recover.
Today? Goldman Sachs is forecasting just 3% annual returns from 2024 to 2034. It sounds bleak but not surprising: The S&P is trading at its highest price-to-earnings ratio since the dot-com boom. Vanguard isn’t far off, projecting around 5%.
In fact, nearly everything feels priced near all-time highs — equities, gold, crypto, you name it.
That’s why billionaires have long carved out a slice of their portfolios in an asset class with low correlation to the market and strong rebound potential: post-war and contemporary art.
It may sound surprising, but more than 70,000 investors have followed suit since 2019 — through Masterworks. Now you can own fractional shares of works by Banksy, Basquiat, Picasso and more.
Masterworks has sold 27 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8%.*
Moneywise readers can get priority access to diversify with art: Skip the waitlist here.
*Past performance is not indicative of future returns. Investing involves risk. See important Regulation A disclosures at Masterworks.com/cd (6).
Read More: Non-millionaires can now hoard property like the 1% — how to start with as little as $100
Tighten your retirement budget
A well-diversified and robust portfolio of growth assets can help you accumulate enough wealth to offset any potential benefit cuts (or other reforms) to Social Security. But these moves might only cover some of the gap.
If your income and savings are insufficient to fully outweigh benefit cuts, you may need to adapt your retirement budget as well.
Trimming your retirement budget could be an elegant way to prepare for a potential benefit cut. Skipping some vacations, rescheduling planned cruises or downsizing to a smaller home to save on shelter costs could help you plug the gap.
The best case scenario is that you’ve successfully streamlined your budget, without compromising on comfort, and lawmakers have successfully avoided a cut by the time you retire.
But if you’re still feeling uneasy about shockproofing your retirement budget, consider working with an experienced financial planner. Platforms like Advisor.com can help you get connected with a professional who can analyze your finances and align your long-term plans with your spending habits and desires.
Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, meaning that they are legally required to act in your best interests.
Just enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert best-suited for your needs based on your unique financial goals and preferences.
Finding the right advisor isn’t always easy — there’s no one-size-fits-all solution. That’s why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they’re the right fit for you.
With an expert in your corner, you can prepare for any future outcome of the Social Security system.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
MSN (1); Congressional Budget Office (2); 401(k) Specialist (3); Committee for a Responsible Federal Budget (4),(5); Masterworks (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
