No matter what your retirement plans entail, you’ll probably rely on Social Security for a good chunk of your income. And the nice thing about those benefits is that they’re guaranteed for life.
But Social Security is facing a major funding shortfall in the coming years. Due to a shrinking labor force, the program is expected to owe more in scheduled benefits than it collects in revenue. And while the program isn’t going bankrupt, benefit cuts are on the table.
Even though lawmakers could act to prevent Social Security cuts, it’s important to prepare for them, whether you’re still working, nearing retirement, or already retired and collecting those monthly checks.
Social Security benefits could face a 22% cut
The Social Security Trustee recently released an update on the state of the program’s finances, and they shared that the program’s Old-Age and Survivors Insurance Trust Fund is expected to be depleted by 2032.
Social Security can continue to pay benefits once that trust fund runs out, since it will still have payroll tax revenue coming in. But at that point, incoming revenue may only suffice in covering 78% of benefits, leading to a 22% cut.
As of May 2026, the average monthly Social Security benefit was about $2,083. If a 22% benefit cut is implemented, the typical retiree on Social Security could lose out on about $458 per month.
Thankfully, Social Security cuts are not a given. Lawmakers can implement different measures to prevent them. But it’s important to prepare for cuts in case Congress does not manage to stave them off completely.
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Preparing for Social Security cuts if you’re still working
If you’re still working, you may have many years until you’re even able to collect Social Security. And if you start saving or boosting your savings rate now, you may end up retiring with enough money that a Social Security cut, if it happens, doesn’t hurt your finances.
Start by budgeting carefully, so you’re able to allocate a decent chunk of your paycheck to your IRA or 401(k) plan. And if you have a workplace retirement plan, aim to collect your full employer match if your company offers that benefit.
It’s also important to invest your savings strategically. If retirement is a few decades away, putting your savings into the stock market could allow your money to grow significantly over time. Stocks do carry risk, but with a years- or decades-long investing window, there should be time to recover from downturns your portfolio might face.
Preparing for Social Security cuts if you’re nearing retirement
If you’re nearing retirement, you still have a good opportunity to boost your savings to compensate for a potential Social Security cut. First, see if your lifestyle allows you to reduce big costs.
If your kids have grown up and moved out of the house, for example, downsizing could result in big savings on your monthly bills. And that could free up money to contribute to your IRA or 401(k).
Also, don’t forget that if you’re 50 or older, IRAs and 401(k)s let you make catch-up contributions. And don’t ditch your stock holdings entirely just because retirement is getting closer. You could scale back if you’re within five to seven years of retirement, but aim to keep some stocks in your portfolio so your money can continue to grow.
Preparing for Social Security cuts if you’re still already retired
If you’re already retired, you might assume that your situation is hopeless if Social Security cuts benefits. But you may have more options for boosting and stretching your income than you think.
First, review your bills and identify any costs you can trim. Swapping your current cell phone carrier for a cheaper plan could free up some money for savings, as could replacing cable with a couple of streaming services.
Next, look into part-time work. It can be a flexible gig role if that’s better for your schedule or consulting in your former line of work. Don’t assume that a part-time job has to mean ringing up retail purchases or being chained to an office desk.
Finally, make sure the savings you do have are working for you. If your portfolio isn’t generating much income, you may want to do some asset shuffling.
Bonds, dividend stocks, and real estate investment trusts (REITs) are all assets that commonly produce income regularly. Changing your investment mix could allow your portfolio to become a more reliable income stream, which, if necessary, could take the place of the missing portion of your Social Security checks if benefits are slashed.
Bottom line
Social Security may end up being an income source you rely on heavily once you retire. And if you’re retired already, you probably depend heavily on those monthly checks. So it’s important to prepare for benefit cuts, even though they’re not guaranteed to happen.
That means boosting savings and taking other key steps to stretch your retirement dollars further. It also means following up on what’s happening with Social Security, so you know what to expect, and there are no sudden surprises.
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Author Details
Maurie Backman
Most retirees will make their Social Security claiming decision exactly once, which is why Maurie Backman has spent more than 20 years helping them understand it. She covers benefit calculations, COLA forecasts, and the policy changes that quietly reshape what retirees receive each month. Her work has appeared in Kiplinger, The Motley Fool, 24/7 Wall St., Bankrate, and U.S. News & World Report.
