AARP warns this group has the most to lose due to the coming Social Security changes

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With Social Security’s potential shortfall looming, it’s easy to focus on how any benefit cuts could impact America’s retirees. However, AARP (1) recently issued a stern warning that older Americans aren’t the only ones who could be impacted by Social Security’s uncertain future.

In fact, today’s retirees might not even be the primary group harmed by it.

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AARP says that it’s younger Americans who face the greatest risk, since they’ll have to deal with any changes made to keep the Old-Age and Survivors Insurance Trust Fund, which supports the retirement benefits program, from running dry (2) by late 2032.

Currently, Social Security collects revenue from workers and some retirees paying tax on a portion of their benefits. The problem is that this revenue isn’t enough to pay all promised benefits, so Social Security relies on a trust fund to cover the gap.

If that fund runs dry, Social Security would automatically cut benefits by 22%, as the revenue it collects would cover only 78% of promised benefits. This could be catastrophic not only for retirees but also for lawmakers who let it happen under their watch, since older Americans are a powerful voting bloc.

But their reforms could be equally catastrophic for younger generations. According to AARP, one way this might happen is if Congress fixes the revenue deficit by putting the benefits of younger Americans on the chopping block.

“They would be reducing the benefits of young working adults,” Jenn Jones, vice president of retirement security and livable communities in AARP’s government affairs office, said. “Younger generations actually have the most at stake.”

The changing climate of retirement

AARP further explained that young people may face more than a benefit cut. They could be facing higher taxes, since raising additional revenue might be necessary to shore up Social Security.

Bill Sweeney, senior vice president of AARP’s Government Affairs office, also pointed out that some older workers had guaranteed pensions that provided them with lifetime income to supplement Social Security. Now, most young people need to deliberately contribute to their 401(k)s instead of using defined benefit plans.

As bleak as these warnings may seem, it’s worth noting that similar concerns have been addressed in the past — although decades ago now.

In 1983, Congress reformed Social Security, when it phased in a change to the full retirement age that affected only those born in 1938 or later (3). That meant people who were 45 or younger at the time the law passed were the groups who faced a de facto benefit cut — not current retirees.

If full retirement age is changed again this time, today’s workers will have to either wait longer for their full benefit (and collect less by missing out on years of income) or get hit with more early filing penalties (and get smaller checks for life).

In the end, it could be younger Americans who — once more — pay for the mistakes of their elders. That’s unless they fight for their benefits.

“It’s important for young people to understand that they have a stake in this, not just for their parents and grandparents but also for their own future,” said John Hishta, senior vice president of campaigns at AARP.

So, what can the youngest workers do? One option is to monitor legislative changes and make their voices heard, but they could take matters into their own hands as well.

Here are a few ways to set yourself up financially for a future where Social Security may not play such a big role.

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Put your spare change to work

The first thing you could do is plan to rely less on Social Security. If benefit cuts are on the way, then building a bigger nest egg as soon as you can could help.

For many retail investors, this means hitching a ride on an index fund or ETF. These financial tools track the broader market and, ideally, spread out your risk among a variety of different public companies. The idea is to put in money regularly over the course of a lifetime, and reap the benefits of compound interest when you retire.

If you’re looking to get into investing, you can get started with Acorns, an app that automatically invests your spare change.

How it works is simple: Just sign up and link your debit or credit cards. Then, every time you buy something, Acorns rounds up the total to the nearest dollar. This turns a morning coffee for $3.25 into a 75-cent investment in your future.

From here, that money goes into a diversified portfolio of ETFs that you can tailor to your risk tolerance. Along with big names like the Vanguard S&P 500 ETF, Acorns also sets you up to invest in specific sectors of the economy through custom portfolios. This includes areas like heavy industry, energy, consumer staples and utilities.

Then, once you’re comfortable with your round-ups, you can supercharge your savings with recurring monthly deposits into your favorite funds. And if you sign up today with a $5 recurring deposit, Acorns will add a $20 bonus to help you begin your investment journey.

Set a budget that prioritizes investing

Investing to supplement Social Security could be critical for young people who want a secure future despite potential benefit changes. But it’s not always easy to find the extra cash to invest, especially when the cost of living seems to keep going up.

Rounding up your spare change only works if you know you have the room to do it.

These days, it’s arguably more important than ever to have a budget, and using Monarch Money to create it can help you manage your money wisely so that you can direct it toward investing in your future.

Monarch Money puts all your finances under one roof, from your banking statements to your investments, giving you a full picture of where your money is going. You can also create separate and joint accounts to work together with a partner.

And the best part? Monarch Money offers a seven-day free trial so you can see if it’s right for you. If you like what you see, you could then snag 50% off your first year with code WISE50.

Build a diversified portfolio

If Social Security does get cut in the future, you might have to rely more than ever on your investments. This is why it’s important to build a diversified portfolio that includes assets that protect you from economic uncertainty and inflation.

For instance, assets like gold are often viewed as both a recession-resistant investment and a hedge against inflation. Since it’s not tied to any one country, currency or economy, investors tend to flock to gold — driving prices higher — in times of economic uncertainty or geopolitical instability.

What’s more, the precious yellow metal can’t be created out of thin air or printed at will by central banks, making it an attractive alternative to fiat currencies. This inherently limited supply can help it store value in the face of inflation.

If you’re nearing retirement, gold can also act as an alternative to draw from when you’re pulling from your retirement accounts. Just because your stocks are down doesn’t necessarily mean gold will be too.

If you’re curious about adding precious metals to your broader inflation-hedging strategy, a gold IRA from Goldco lets you hold physical gold and other metals while still getting the tax advantages of an IRA.

Goldco is widely regarded as one of the leading companies in the space, with a 4.8/5 rating on Trustpilot and an A+ from the Better Business Bureau. They also offer a guaranteed buyback program, meaning they’ll repurchase your metals at the highest price according to market value if you ever decide to sell.

If you want to explore whether precious metals could be a helpful hedge for your portfolio, you can download Goldco’s free gold and silver guide to see if it’s a good fit for you.

Get help with a financial plan

Finally, it’s only natural to feel a bit lost about how to prepare for retirement, especially one where the role of Social Security is uncertain. Things like managing withdrawals, minimizing tax exposure and ensuring long-term sustainability often require a lot of coordination and strategic planning.

Especially for investors with larger portfolios, these financial decisions can become increasingly nuanced. In such cases, working with a financial advisor can help reduce costly mistakes.

For instance, if you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio. From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

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AARP (1); Social Security Administration (2), (3)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.