Social Security Benefit Cut Timeline: What Workers Today Need to Know

Millions of older Americans rely on Social Security to make ends meet in retirement. And chances are, if you’re still working, you’ll one day appreciate having those monthly checks.

But Social Security is facing a serious financial shortfall that could result in benefit cuts. And the timing of those potential cuts just got a bit worse.

The latest benefit cut timeline

Last year, the Social Security Trustees said that the program’s Old-Age and Survivors Insurance (OASI) Trust Fund is expected to run out of money in 2033. At that point, only 77% of benefits are expected to be payable.

If Social Security were to combine its OASI Trust Fund with its Disability Insurance (DI) Trust Fund, the program would be able to sustain benefit payments until 2034. From there, though, only 81% of benefits are expected to be payable.

Plus, lawmakers would need to vote to combine the two trust funds to buy the program that extra year. Social Security can’t just combine them on a whim.

These projections, however, were made prior to the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4 of last year. The OBBBA includes a new $6,000 senior tax deduction that lets most Social Security recipients off the hook from paying taxes on their benefits.

That’s a problem for Social Security, though. The program relies on that revenue stream to keep up with benefit payments.

Granted, Social Security gets most of its income from payroll taxes. But losing out on benefit taxation puts the program in an even worse position.

For this reason, the Congressional Budget Office now predicts that Social Security’s OASI Trust Fund will be out of money in 2032 — a full year sooner than what the program’s Trustees projected last year. And that timeline could continue to shift for the worse.

How to prepare for potential Social Security cuts

It’s important to realize that Social Security cuts are not a given. Lawmakers have different solutions they can use to prevent cuts from happening. However, most of those solutions introduce a different drawback.

Raising the Social Security payroll tax rate is a possibility. But that burdens workers and employers with higher taxes.

Raising Social Security’s full retirement age is also possible. But that effectively sentences millions of workers to a delayed retirement. It also puts certain workers at risk of self-imposed benefit cuts — namely, people who can’t continue working past current full retirement age due to health issues or other reasons.

As such, it’s best to prepare for Social Security cuts, even if they don’t end up happening. And a good way to do so is to consistently contribute to an IRA or 401(k).

But that’s not all. In addition to funding your retirement savings, invest wisely.

Choose low-cost index funds so your money is able to grow without large fees eroding your returns. And if you’re going to invest in stocks individually, diversify to protect your portfolio while promoting growth.

Also seek out any extra money you can get your hands on for retirement, whether it’s matching dollars for your 401(k) or side hustle income you can bank. The more robust your nest egg is once you reach retirement, the less problematic Social Security cuts should be if it turns out lawmakers are unable to prevent them.