Social Security could be cut by $500 monthly in 2032, a new report claims. Here’s how to boost your savings before that happens.

Social Security recipients may have to make up a shortfall of as much as $500 each month. That’s according to a new report released this week that outlined a scenario in which the program’s retirement trust fund becomes insolvent by 2032, resulting in a 24% cut for recipients. Those cuts could impact 10% to 23% of recipients in each state. That would easily wipe out the expected cost-of-living adjustment many are hoping for later this year. That COLA would be just 4% or around $80 more in monthly checks.

And these developments aren’t happening in a bubble. Millions of Americans already find their budgets strained thanks to a surging inflation rate and elevated borrowing costs due to a higher Federal funds rate. So these possible changes will only contribute to growing financial issues, not alleviate them. That’s especially problematic for seniors and Social Security recipients, both of whom should be looking for safe and effective ways to boost their savings right now. 

Fortunately, there are still effective ways to do this while leveraging today’s still-elevated interest rate climate. Below, we’ll detail three worth serious consideration now.

Start by seeing how much interest you could be earning with a top CD account here.

How Social Security recipients can boost their savings before a potential cut

With six years to go before any potential cut goes into effect, current recipients and those planning to receive Social Security in the future should use this time strategically to boost their own personal savings to help offset a reduction. Here’s how they can earn around 4% on their money right now:

Deposit it into a CD account

A certificate of deposit (CD) account has a rate of 4% or higher right now, and the rate is fixed, meaning that you’re guaranteed to earn the return on your money as long as you keep the funds in the account until the maturity date. This is one of the safest homes for your money now and one of the most profitable, as long as you can maintain the account with ease. 

Remember, however, that early withdrawal penalties can easily wipe out the interest earned on the account to date, so if you need to maintain access to your funds at all times, alternative savings accounts may be preferable.

Learn more about your current CD account options now.

Deposit it into a high-yield savings account

High-yield savings accounts have interest rates competitive with the top CDs, and savers won’t need to sacrifice access to their money as they would with that type of account. The catch? Interest rates on high-yield savings accounts are variable and likely to change over time based on market conditions. 

Still, that’s not necessarily the disadvantage it normally would be, as today’s high interest rates are largely expected to hold for the foreseeable future. And, in the interim, you’ll earn a rate that’s exponentially higher than the 0.38% average traditional accounts are currently providing.

Deposit it into a money market account

A money market account has a top rate around 3.90% right now, making it the least profitable of these three accounts, and that rate is also variable and subject to change over time. But if savers want to streamline their banking and still earn a good return on their money, this account could be the best option for them, as it also comes with check-writing features that the other two accounts do not. This will allow savers to keep their money gathered in one location while also being able to pay expenses, all while earning close to $4 for every $100 deposited.

The bottom line

A $500 cut to your monthly Social Security check could be financially perilous, even if that possibility still lies years away. To boost your savings now, it makes sense to keep it in an account with a competitive rate. For many, that could mean shifting it into a CD, while some may find a high-yield savings or money market account preferable, and others may prefer to mix their funds among all three. Consider your options carefully, though, so you’ll be better prepared (and have more money) if or when this potential cut becomes a reality. Online marketplaces make it simple to compare account types, rates, lenders and more, all in one easy-to-navigate location so you can get started right away.

Learn more about your current savings account options here.