Retirement planning is full of question marks. You don’t know how long you’ll live, how much you’ll spend annually, or how your health will be. These challenges have been around as long as our modern idea of retirement. But today’s seniors also face a new struggle that many in the past didn’t have to worry about.

Social Security’s trust funds are dwindling rapidly, and the latest Trustees’ Report estimates that they’ll be depleted in 2032. We don’t know exactly what will happen after that, which makes it difficult to plan your retirement budget. A few possibilities seem more likely than others.

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What could happen to Social Security in 2032

The Trustees’ Report estimates that the program’s trust funds will be depleted in the fourth quarter of 2032, though this is subject to change. Recent legislation has bumped up the depletion date by a few months, and this could happen again over the next couple of years.

If everything goes according to the latest report and the government makes no attempts to fix Social Security, it could face a 22% cut at the end of 2032, and a further 16% benefit reduction could follow between then and the year 2100. This would obviously be a disaster for retirees who rely heavily on their benefits, but fortunately, it isn’t likely.

Washington will almost certainly make changes to keep Social Security going, as it did the last time it faced an insolvency threat in the 1980s. But we don’t know what these changes will be yet, or when they’ll take effect. Several members of Congress have proposed plans over the years, but none have gotten very far.

This is likely because avoiding large Social Security benefit cuts will involve raising taxes, and no one wants to see that happen. However, the question of who will pay and how much more they’ll owe remains undecided.

The government could raise the payroll tax rate on workers, the benefit tax rate on seniors, or the ceiling on the maximum taxable earnings ($184,500 in 2026) to make wealthy people pay more into the program. Or it may do all of the above.

What this means for you if you’re already on Social Security or plan to apply soon

It’s possible that your Social Security benefits may not go as far in the future as they do today, or that it may be more difficult to save for retirement in the future than it is right now. It’s especially important to prioritize savings as much as you can over the next few years. The more money you have saved, the less you’ll need to depend on Social Security.

If you’re really worried about what might happen next, consider working a little longer, so you have more time to save. You could also postpone your retirement until we know what will happen with Social Security.

When the government does announce its fix, it’ll be time to review your retirement plan. Be prepared to adjust your retirement budget if necessary to remain financially secure.

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