While I was having dinner at her house over the MLK holiday weekend, my sainted mother started to fret about likely cutbacks this year to Social Security. My mom is a professional hand-wringer, but her anxiety isn’t always misplaced. In the case of Social Security, she’s right to worry.

Social Security invariably undergoes modest modifications every year, but this year will witness sweeping changes under a Trump administration and Republican-led Congress. Some of these coming cuts were passed by lawmakers before the 2016 presidential election.

Get ready to be squeezed…

Social Security benefits face a host of major reductions in 2017 and beyond, while the program’s taxes are set to rise.

As the investment strategists at our flagship publication Personal Finance put it:

“Get ready to be squeezed by changes to Social Security…

Meanwhile, the program, which is only fully funded to 2034, is clamping down on claiming strategies that benefited earlier retirees and subjecting more wages to Social Security taxes for high earners who have yet to retire. So whether you’re earning or drawing benefits, there’s something for everyone to dislike.”

Here’s a look at the four biggest changes coming down the pike in 2017. Whether you’re retired, like my mom, or you still have years to go, it’s time to face the music and rethink your retirement needs:

1. Means Testing Is in Your Future

Proponents of means testing for Social Security are poised to get their way this year. They argue that Social Security benefits should be funneled to those who truly need them. By cutting benefits for higher-income Americans, more financial wherewithal would be available to those with lower incomes.

Opponents of means testing explain that Social Security is an insurance program and those who face the event for which they’ve paid insurance (such as retirement or disability) have the right to receive full benefits. With Republicans in charge of the White House as well as Congress, those who favor means testing have the upper hand.

2. The Retirement Age Is About to Get Higher

Raising the retirement age has long been a popular idea with the GOP, so it’s likely to be in any Social Security reform package this year.

The early retirement age to begin collecting Social Security benefits is 62. You’re entitled to a higher monthly benefit if you wait until you reach full retirement age. Under current law, full retirement age is 66, but that’s scheduled this year to begin a slow rise to 67. To summarize a complex formula, full retirement age will be fixed at age 67 for those reaching age 62 after 2022.

Experts estimate that benefits drop roughly 7% across the board for each year that the full retirement age is increased. Existing proposals for raising the full retirement age even higher are all over the map, ranging from 69 to 76.

3. Social Security Taxes Will Rise

Americans earning more than $118,500 a year will pay higher taxes for Social Security in 2017. In 2016, wage earners paid Social Security tax on the first $118,500 earned. In 2017, the wage base increases to $127,200. If you earn at least $127,200, your taxes go up by $539.

4. Overall Benefits Are On The Chopping Block

The following general proposals have been floated in Congress and they’ll probably get championed in one form or another this year:

• Raise benefits for low-income workers with lifetime average salaries of up to $22,105 in inflation-indexed pay. Slash benefits for everyone else from 17% to as much as 43%.

• Terminate cost-of-living adjustments for retirees earning an adjusted gross income of more than $85,000, or $170,000 for couples. Reduce benefits for others by using the “chained” consumer price index (CPI) to calculate other cost-of-living benefits.

The chained CPI is an alternate measure of price levels of consumer goods and services based on the idea that in an inflationary environment, consumers will choose less-expensive substitutes. This reduces the rate of cost of living increases.

Questions about Social Security in particular or your retirement needs in general? Drop me a line: mailbag@investingdaily.com — John Persinos

A better plan for retirement income…

These imminent curtailments to Social Security underscore something you should already know: You can’t count on Social Security to support a comfortable retirement. You need a more reliable plan to ensure a lifetime of income. And regardless of your age, you need to find one now.

Here’s the good news: a consistent income-generating technique does exist, but it’s been forgotten or ignored by most investors.

The returns look just like a paycheck, which should come in handy as Social Security checks start to shrink.

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