In less than a decade, your Social Security benefit could plunge by 22%. That alarming truth is the result of the shaky financial ground that the program currently rests upon.
Find out more about why you might lose nearly one-quarter of your benefit and how likely it is that such an event could undermine your retirement plan.
Why benefits might face cuts soon
The Old-Age and Survivors Insurance (OASI) Trust Fund that finances retirees’ Social Security benefits is scheduled to be depleted during the fourth quarter of 2032, according to the most recent report by the Social Security Board of Trustees.
At that point, incoming payroll tax revenue is expected to cover just 78% of scheduled benefits. In other words, every current and future beneficiary should expect a 22% cut in benefits unless the problem is fixed.
It’s important to note that Social Security as a whole would not suddenly disappear. Rather, the program’s payouts would be reduced from what they are today.
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The source of Social Security’s woes
America’s population is aging, and more seniors are living longer. However, Social Security simply is not taking in enough revenue to keep the program’s trust fund flush with cash. The birth rate and immigration in the U.S. are both slowing, meaning there are not enough workers paying payroll taxes to support benefits for the growing number of seniors.
In addition, recent federal tax policy in the form of the One Big Beautiful Bill Act lowered the tax burden on seniors.
While that sounds good, it also means fewer seniors are paying taxes on Social Security benefits than they were in the past. This has the side effect of depriving the Social Security program of a source of revenue.
Cuts to Social Security would be automatic
It is important to note that by law, the projected 22% cut in benefits would happen automatically. Congress would not have to vote to cut benefits.
Instead, the cuts automatically go into place once the trust fund is empty. That means that unless there is a fix for Social Security’s funding shortfall, the question surrounding benefit cuts is not “if” but rather “when.”
Here’s how much you stand to lose
Currently, the average Social Security benefit is $2,081 a month. A 22% reduction would result in roughly $458 less in benefits each month, or about $5,500 over the course of a year.
If you are earning a benefit of $2,800 instead, the loss would be closer to $616 a month.
This year’s trustees’ report moved the depletion date up one quarter earlier than last year. This is partially because the One Big Beautiful Bill Act reduced trust fund revenue by lowering taxes on seniors’ Social Security benefits by an estimated $30 billion a year.
Why cuts would be so devastating for retirees
Cuts to Social Security benefits would be a serious blow to millions of retirees.
More than half of retirees say Social Security is their main source of income, according to a 2025 study from the Transamerica Center for Retirement Studies.
In addition, nearly 40% of retirees say Social Security is their only source of income. This is true even though the Social Security Administration (SSA) has stated that the program was never intended to be anyone’s sole source of income.
How likely are benefit cuts?
The history of Social Security dates back nearly a century, to 1935. In all that time, Congress has never allowed an automatic benefit cut to take effect.
The last time Social Security faced grave danger was in the 1980s, and the 1983 reform that eventually passed Congress with bipartisan support came just months before a similar deadline. Currently, two legislative proposals are floating around: the House Bipartisan Social Security Commission Act of 2026 and the Senate proposal to lift the Social Security payroll tax cap. These represent the most active bipartisan reform activity in years.
So, it probably doesn’t make sense to panic at this point.
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Don’t panic, prepare
However, just because you shouldn’t panic doesn’t mean it’s wise to leave yourself unprepared for a worst-case scenario.
You still have about seven years before the trust fund is projected to be depleted. That is plenty of time to get your own financial house in order and to build a savings cushion in case you need it.
If you are unsure about how to move forward with a savings plan, consult with a financial advisor or other money professional.
Bottom line
Social Security is facing a crisis, and the fallout could mean sharply reduced benefits for both today’s retirees and seniors in the future.
However, there is also a good chance the worst-case scenario won’t come to pass. If you are living on just Social Security, now is the time to take steps to prepare for the worst, even as you hope for the best.
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Author Details
Chris Lewis, CEPF
Chris Lewis has spent his career turning data into answers. As the Head of Research at FinanceBuzz and a Certified Educator in Personal Finance, he oversees the data journalism and media relations teams, digging into the personal finance topics that shape Americans’ lives at every stage, from Social Security and retirement income to 401(k) strategies, jobs, and real estate.
