Social Security Cuts Edge Closer to Reality. How Much of a Drop Should You Plan For?

There’s perhaps no more critical source of income for retired Americans than Social Security.

The average retirement benefit today amounts to roughly $2,801 per month. And while that’s not exactly a huge retirement salary, for millions of older Americans, it spells the difference between being able to cover expenses or not.

But Social Security is facing a major financial crisis in the coming years. Due to an expected mass exodus of older workers, the program won’t be able to take in enough revenue to keep up with retirement benefits.

Once the Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund runs out of money, the program may be looking at widespread benefit cuts. And it’s important to plan for that reality.

How much might Social Security get cut, and when?

Last year, the Social Security Trustees projected that the program’s OASI Trust Fund would be out of money by 2033. At that point, they said Social Security would only be able to keep up with 77% of scheduled benefits, marking a potential 23% cut.

Earlier this year, the Congressional Budget Office said it expects the OASI Trust Fund to run out of money by 2032. It’s unclear as to whether that impacts the extent of cuts retirees might be looking at.

The Social Security Trustees have not yet released their 2026 summary of the program’s finances. Although the report is supposed to be issued by April 1, the Trustees often miss that deadline, delaying their key update well into May or June.

Given that the Social Security Administration underwent major staffing cuts this past year, it’s hard to say how timely the agency will be with data in the near term.

Should you prepare for Social Security cuts?

Social Security benefit cuts are not inevitable. The program has faced its share of financial woes in the past, and Congress has always managed to stave off benefits cuts. There’s a good chance they’ll be able to do the same this time around.

But it’s best to plan for Social Security cuts in case lawmakers are not able to come up with a fix. And for now, your best bet may be to assume that you’re looking at a 23% reduction in benefits.

How do you plan for that? If you’re still working, the absolute best thing you can do is to boost your savings rate. The more you’re able to contribute to an IRA or 401(k), the more savings you’re likely to grow, leaving you less reliant on Social Security.

If you’re already retired, your options may be more limited. But that doesn’t mean all is lost.

Start by getting onto a budget so you can see where your money is going every month. Then, if possible, start making small cuts to your spending.

From there, look at options for generating income. That could mean returning to work or seeing if it’s possible to rent out a room in your home. If you’re able to bank some money from working or monetizing your home, you can also start an investment portfolio and load it with assets that pay you regularly, like high-quality bonds or even dividend stocks or ETFs.

The idea of Social Security cuts is scary, and it’s best to assume that the program will have to slash benefits. If you have a solid backup plan and those cuts don’t happen, you’ll be in a much stronger financial position for it.