As if uncertainty about the economy wasn’t enough, now retirees and near-retirees need to worry about the timeliness of their Social Security benefits. As the media has extensively reported, people facing retirement will likely experience delays in receiving Social Security benefits due to the government downsizing underway.
For example, Gloria is retiring in September 2025 and expects to start drawing Social Security benefits in October. But two of her friends, who applied for benefits over 60 days ago, still haven’t received their payments. Concerned about the delays, Gloria is looking for a backup plan to ensure she has a steady income while waiting for her first Social Security check.
Historically, new applicants received their first payment within 30 to 45 days, but with the Social Security Administration (SSA) planning to cut 7,000 jobs, waiting times could increase significantly. The SSA has already been operating at its lowest staffing levels in 50 years, and processing delays are not expected to improve any time soon.
Given these uncertainties, it’s essential to have a financial contingency plan.
How to Prepare for Delayed Benefits
Certificates of deposit (CDs) can provide a reliable income source while waiting for Social Security payments. Here how:
- Use CDs Monthly Interest Payments
Some CDs allow you to receive monthly interest instead of waiting until maturity. This can serve as a temporary stream of income until your Social Security benefits begin. Once they do, you can stop the withdrawals and let the interest continue to grow.
- Time CD Maturities with Your Retirement Date
If you plan to retire soon, consider opening a 6-month CD. It will mature around your retirement date, providing funds in case of Social Security delays. CDs generally offer more competitive interest rates than traditional savings accounts, making them a smart option for short-term cash needs. - Time CD Maturities with Your Retirement Date
If you plan to retire soon, consider opening a 6-month CD. It will mature around your retirement date, providing funds in case of Social Security delays. CDs generally offer more competitive interest rates than traditional savings accounts, making them a smart option for short-term cash needs. - Build a CD Ladder for Consistent Cash Flow
CD laddering involves opening multiple CDs with staggered maturity dates. For example, you could invest $1,000 to $20,000 in CDs that mature monthly for several months. This way, you’ll have a steady stream of income while waiting for Social Security benefits. - Use No-Penalty CDs for Flexibility
A no-penalty CD allows you to withdraw funds at any time without an early withdrawal fee. While these CDs may offer slightly lower interest rates than traditional CDs, they provide liquidity in case your Social Security payments are delayed longer than expected.
