CHARLOTTE, N.C. — The Social Security Administration released a report earlier this year that found the trust fund that helps pay for its benefits will be depleted.
CEO of Charlotte-based Alloy Wealth Management Mark Henry told WCNC Charlotte that would primarily leave payroll taxes to help fund the program.
"When you think about Social Security running out, the Congressional Budget Office has already published a report saying in 2034, Social Security will have to be cut by 25%," Henry explained.
However, many beneficiaries might be questioning if it will continue to sustain their needs.
RELATED: House Republicans haven’t introduced a bill to lower Social Security payments for some people
As of the most recent data, approximately 67 million Americans receive benefits from the Social Security Administration, 40% of whom rely solely on their benefits.
"I personally don't believe when we get there, they're going to just go out there and rapidly cut 25% off of everyone's Social Security check they're getting," Henry maintained.
However, the financial advisor added a caveat.
"Do I think there's going to be Social Security revisions and change? Yes," Henry said. "Both political parties are going to have to learn to work together so they can come up with a plan to save Social Security. Social Security in of itself is, actually, was funded pretty well. Unfortunately, it's been robbed and borrowed ... and it's put us in a situation."
Henry said, in the meantime, benefit increases are also declining.
"The COLA, cost of living adjustment, is supposed to be based off of what inflation is," Henry outlined. "So we got the largest we had ever seen in forever, last year. Well, inflation was really really high. They tell us inflation is coming down."
In 2023, seniors saw an almost 9% cost of living increase in their monthly checks. In 2025, that's going to be closer to 2.5%.
"Right now, people still are having a very difficult time whether they're on Social Security or off, whatever," Henry said. "I find very few people that say, 'Oh, the costs have come down. I think it's cheaper.' The idea for the young people is you're not supposed to rely on Social Security."
Henry said for people who have been on Social Security for 20 years or so, the change shouldn't feel too drastic.
"I don't see them cutting it much, if anything," Henry explained. "Maybe they get a little haircut, maybe nothing. Then you get back to younger, and they get a bigger one. Then you get back to younger. Then you get to kids that are not retired right now. They're in their 30s or 40s. I think Social Security rules will be completely different."
Henry said knowing how to claim Social Security is also very important, which goes hand in hand with learning how to maximize your benefits. Here are his tips:
Contact Jane Monreal at jmonreal@wcnc.com and follow her on Facebook, X and Instagram.