Personal Finance
Worried about Social Security’s future? What to know before claiming benefits
AleksandarNakic | E+ | Getty Images
When it comes to Social Security, prospective beneficiaries often worry whether their benefits will be there when they retire.
Polls show Americans generally have low confidence in the program’s future.
A 2024 survey from Nationwide Retirement Institute found 72% of adults worry Social Security will run out of funding in their lifetime.
Likewise, an October Bankrate survey found that only 6% of Americans are “not at all concerned” their benefits won’t be paid when they reach retirement age. Gen Xers — who at ages 44 to 59 are getting closer to retirement — are most likely to be concerned about the program’s future, Bankrate found.
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President Joe Biden recently signed the Social Security Fairness Act, which will increase Social Security benefits for nearly 3 million individuals who also receive public pensions. Yet because that legislation did not provide for a way to fund those extra benefit payments, Social Security now has a shorter runway of time that it can afford to pay full benefits.
In 2024, Social Security’s trustees projected the program’s combined funds may last until 2035, at which point 83% of benefits would be payable. The newly enacted changes bring that date closer by six months, according to Congressional Budget Office estimates.
“There’s no new sources of revenue here, and so by definition, depletion is going to happen sooner versus later,” said David Blanchett, head of retirement research at PGIM DC Solutions.
To address the program’s shortfall, Congress may raise taxes, cut benefits or a combination of both.
Those looming changes may influence claiming decisions — for all beneficiaries, as well as those affected by the new legislation.
Now is the time to ‘stress test’ your plan
Social Security retirement benefits are based on a worker’s earnings history, as well as the age at which they claim.
The earliest claiming age is 62. But claiming that early results in permanently reduced benefits.
By waiting until full retirement age — which ranges from 66 to 67, depending on date of birth — retirees will receive 100% of the benefits they’ve earned.
By delaying even longer — up to age 70 — they stand to receive an 8% benefit boost for every year they wait past full retirement age.
Even if there are benefit cuts in the future, experts say it generally helps to have a higher benefit amount, so long as you can afford to delay claiming benefits.
| Year of birth | Social Security full retirement age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and two months |
| 1956 | 66 and four months |
| 1957 | 66 and six months |
| 1958 | 66 and eight months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
Individuals who are in or near retirement may not see imminent changes.
“It’s incredibly unlikely that they’re going to reduce benefits for any current retirees,” Blanchett said.
However, for future beneficiaries, Social Security probably won’t be as generous in 20 or 30 years as it is today, Blanchett said. Exactly how benefits may change will depend on a variety of unknowns, including future immigration and birth rates.
That doesn’t mean Social Security benefits won’t exist at all, Blanchett said. But he said it would be wise to assess how receiving just 80% of today’s benefits, or even 50% of the current value for dual-income households, affects your retirement plan.
Social Security is meant to be just one part of a retirement income plan. If Social Security cuts happen, it helps to have more retirement savings or other assets to rely on.
“The one thing that you can do to kind of help yourself with all these risks and uncertainties is just to save more so that you’re prepared for whatever may happen,” Blanchett said.
Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company, said he recommends a “stress test” for retirement plans in light of the possibility of benefit cuts.
“If you can’t live how you want to live even in the presence of a cut, consider reducing spending a bit now so that you don’t have to reduce it a lot more later,” he said.
If new law affects you, ‘take a fresh look’ at your plan
More than 72.5 million people now receive Social Security and Supplemental Security Income benefits, according to agency data.
Consequently, the nearly 3 million people who stand to benefit from the newly enacted Social Security Fairness Act are just a fraction of the beneficiary population.
The new law eliminates certain provisions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — that reduced Social Security benefits for workers who had pensions or disability benefits from work where Social Security payroll taxes were not paid.
Because those changes have implications for an entire family, the new law may reach double the number of individuals who are directly affected by the changes, after accounting for spouses and children, according to David Freitag, a financial planning consultant and Social Security expert at MassMutual.
The potential difference in benefits may be dramatic. For example, one couple who would have faced a retirement funding shortfall when they had been affected by the WEP and GPO may now have a lifetime surplus of more than $300,000 once those offsets are eliminated, according to MassMutual’s computer models.
The effects of the new changes will vary on a case-by-case basis, and not all beneficiaries stand to see that level of increase. But even just $300 more in monthly income that’s annually adjusted for inflation can make a big difference in retirement, Freitag said.
“If you’re affected by this, you need to take a fresh look at your retirement plan,” Freitag said.
A customer browses eggs on partially empty shelves at a grocery store in Lawndale, California, on Jan. 2, 2025.
Patrick T. Fallon | AFP | Getty Images
Inflation ticked up in December on the back of higher energy and food prices, according to the consumer price index.
The CPI, an inflation gauge, rose 2.9% in December 2024 versus the prior year, the Bureau of Labor Statistics reported Wednesday,
That’s up from a 2.7% annual inflation rate in November, and from a recent low of 2.4% in September.
While the upward move may seem disheartening, evidence suggests inflation should resume its downward drift in 2025, economists said.
But they caution that President-elect Donald Trump’s incoming administration could stall or reverse that progress if it pursues policies like tariffs and tax cuts, which, depending on their scope, may be inflationary.
“The key wildcard here is policy,” Joe Seydl, a senior markets economist at J.P. Morgan Private Bank, said of inflation’s trajectory.
The CPI measures how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, clothing and concert tickets.
CPI inflation has declined significantly from its pandemic-era high of 9.1% in June 2022. However, it remains above the Federal Reserve’s target. The central bank aims for a 2% annual rate over the long term.
(The Fed uses a different but similar inflation measure, the Personal Consumption Expenditures Price Index. CPI readings tend to run about 0.2 to 0.3 percentage points higher, Seydl said.)
“We’re not that far away,” Seydl said. “By the end of this year, we’d expect the year-over-year rates to be back in those targets.”
Eggs are a ‘swing factor’
There were some trouble spots in December.
For example, grocery prices increased by 0.3% from November to December, according to CPI data. (A rise of about 0.2% a month is consistent with hitting the Fed’s target, economists said.)
Eggs are a “swing factor” contributing to that increase, Seydl said.
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An outbreak of avian influenza, known as bird flu, in the U.S. has had a “significant impact” on egg prices, he said. The virus is highly contagious among birds and has killed millions of egg-laying chickens, reducing egg supply.
Egg prices jumped 3.2% from November to December, the largest increase for any grocery item, according to the CPI. They’re up 37% since December 2023.
Brandon Bell | Getty Images News | Getty Images
Inflation for gasoline jumped, too: Prices increased 4.4% from November to December, according to CPI data.
However, consumers may not be seeing that in the real world, though: Average prices at the pump actually fell about two cents last month, to $3.01 a gallon on Dec. 30 from $3.03 on Dec. 2, according to weekly Energy Information Administration data.
Federal statisticians adjust inflation data for seasonal patterns; gasoline prices fell less than usual in December, and the CPI registered this lower-than-normal drop as an inflation increase, Seydl said.
Gasoline prices are down more than 3% in the past year, according to the CPI. Groceries are up 1.8%.
Shelter inflation continues to retreat
Meanwhile, there were some bright spots in the CPI report, such as shelter.
The 4.6% annual inflation rate for housing in December was the lowest since January 2022. As the largest component of the price index, it has a significant bearing on inflation’s trajectory.
Economists prefer looking at a measure known as “core” CPI, which strips out volatile food and energy prices, for a more accurate reading of underlying inflationary dynamics.
There, the picture is better: Core CPI fell to 0.2% on a monthly basis in December, after having been stuck at 0.3% a month since August. The annual core inflation rate fell to 3.2% from 3.3%.
“It’s encouraging that inflation continues to throttle back, slowly but steadily,” said Mark Zandi, chief economist at Moody’s.
“The only difference between where we are and the Fed’s target is growth in the cost of housing,” he said. “That’s now definitively slowing.”
Zandi estimates inflation could return to its target level by spring or summer, barring any speed bumps from Trump administration policy.
Wage growth continued to cool in December even as the labor market remained strong: Average hourly earnings grew at a 3.9% annual rate last month, down from 4% in November, according to a separate BLS report issued Friday.
This is important because labor is a major input cost for businesses, especially those in the service sector like leisure and hospitality. Businesses may raise prices if wage growth spikes.
Trump tariff threat may influence consumer buying
Elsewhere, airline fares rose 3.9% from November to December, after rising 0.4% the prior month. Used car and truck prices jumped 1.2% during the month and those for new vehicles increased 0.5%.
Increases for new and used vehicles “points to a continued surge in demand for replacement vehicles after October’s hurricanes, which will receive a renewed impetus from the California wildfires,” Thomas Ryan, North America economist at Capital Economics, wrote in a note on Wednesday.
Car insurance prices increased by 0.4% on the month, and are up 11% since December 2023.
This is largely due to a lag effect from high vehicle inflation earlier in the pandemic, economists said. Car prices feed into motor vehicle insurance: When prices are elevated, insurers’ cost to replace vehicles after a car accident is also much higher.
At least some of the recent increase in auto prices may be because consumers are speeding up purchases — thereby raising demand — to avoid potential tariffs imposed by the Trump administration, Seydl said.
Data from a recent University of Michigan Consumer Sentiment Survey “suggest that consumers are becoming more worried about the likely stagflationary impact of Trump’s policy plans,” Stephen Brown, deputy chief North America economist at Capital Economics wrote Friday.
“The expectation of tariffs to come mean consumers judge that it is a better time to buy durable goods,” he wrote.
Freshmen college enrollment increased in fall 2024, the National Student Clearinghouse Research Center said — contrary to its previous report that the enrollment declined.
A “methodological error” in the preliminary enrollment report, released in October, caused the miscalculation, Executive Director Doug Shapiro said in a statement Monday.
“The error in research methodology caused the mislabeling of certain students as dual-enrolled rather than as freshmen and, as a result, the number of freshmen was undercounted, and the number of dual-enrolled was overcounted,” Shapiro wrote.
Because of the error, the October report showed a decline in freshmen enrollment at both two- and four-year institutions. It also showed an even steeper drop in freshmen student enrollment at four-year colleges where large shares of students receive Pell Grants.
CNBC had included the original, erroneous data in several articles, which can be found here, here, here, here, here and here.
“Our subsequent research finds freshman enrollment increased this fall,” Shapiro wrote. He said the new research “is not based on preliminary data … and uses different methodologies to determine freshman enrollees.”
The final freshmen enrollment numbers will be released Jan. 23, the center said.
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Shapiro said the center is “conducting a thorough review to understand the root cause [of the error] and implement measures to prevent such occurrences in the future.”
Revised data shows a 3% rise in overall undergraduate enrollment in the fall compared with that period in 2023, according to the center’s updated analysis. Enrollment was also higher at four-year colleges where large shares of students receive Pell Grants.
“We are encouraged and relieved that updated data from the National Student Clearinghouse shows freshman enrollment is up this school year,” U.S. Under Secretary of Education James Kvaal said in a statement.
“The increase is consistent with what we are seeing on the financial aid side: More than 5% more students are receiving federal aid this year,” Kvaal said.
Some experts had warned that problems with the new Free Application for Federal Student Aid could result in fewer students applying for financial aid and fewer students enrolling in college.
However, because of changes to the FAFSA, more students can now qualify for a Pell Grant, a type of aid that is awarded based solely on financial need.
‘We are not out of the woods’
Higher education expert Mark Kantrowitz said that although there have been improvements with the new FAFSA, “we are not out of the woods yet.”
“The new FAFSA should have yielded a significant increase in the number of applications by low-income and first-generation college students by making the form easier to file. It has not yet fulfilled this promise,” Kantrowitz said. “This year’s form is better than last year, but there is still a lot of room for improvement.”
The U.S. Department of Education released the FAFSA for 2025-26 ahead of schedule, saying it did so with the goal of improving college access.
Overall, total college application volume through Dec. 1 rose 8% for the 2024-25 application season, compared with a year earlier, according to the latest data from the Common Application, an online college application platform.
Kantrowitz, who is not affiliated with the National Student Clearinghouse Research Center, said an error on the part of the research group was “very rare.”
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