Retired couples who depend on Social Security benefits for
seniors might see a steep financial loss if Congress fails to shore up the
Social Security program. The nonpartisan, nonprofit Committee for a Responsible
Federal Budget’s (CRFB) new report projects large benefits cuts that could
impact beneficiaries if the Social Security trust fund becomes insolvent. The
financial problems facing the program are a pressing issue for legislators, who
must act quickly to identify a solution if benefits are to be preserved.
The report shares eye-opening data about how benefits cuts could impact
retirees, bringing additional attention to this important matter.
When the Social Security trust fund might be depleted
The 2026 Social Security and Medicare Board of Trustees annual report projects
that the Old-Age and Survivors Insurance (OASI) trust fund may become insolvent
during the fourth quarter of 2032. That date is one quarter earlier than what
the Trustees projected in the 2025 report.
If the OASI trust fund becomes depleted, the Social Security revenue generated
by payroll taxes may only be enough to pay out 78% of total scheduled benefits.
As a result, an automatic benefits reduction of about 22% may be applied,
reducing the monthly benefits that millions of Americans receive.
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How much Americans could lose if Social Security benefits are reduced
The size of a benefit cut would vary depending on a couple’s age, marital
status, and work history. According to the CRFB’s analysis, if Social Security
benefits were reduced by 22%, a newly retiring dual-earning couple might lose
$16,900 in annual benefits at the beginning of 2033. A typical single-income
couple might lose $12,700 a year, and a dual-earning, low-income couple might
lose about $10,200 per year. High-income couples might see cuts of $22,300 per
year.
At first glance, it might seem like the low-income couple would be impacted less
because of the smaller amount of money lost, but that $10,200 amounts to a
larger percentage of that couple’s total income, meaning the cut could have an
even greater effect on low-income couples.
How benefit cuts might grow over time
The CRFB emphasizes that those projected cuts could potentially grow over time
as the gap between Social Security’s costs and its dedicated revenue also
increases. The CRFB projects that annual benefit cuts may reach 35% by the end
of the century, leaving recipients with even less financial support.
How Medicare cuts might make Social Security cuts worse
The Social Security cuts may coincide with the depletion of the Medicare
Hospital Insurance trust fund, which is projected to occur in the middle of
2033. The fund helps pay for Medicare Part A coverage, and once depleted,
Medicare would only be able to reimburse providers for 89 cents of every dollar
of Part A services that they provide. To cover the shortfall, a cut in spending
or significant tax increase may be needed, further impacting retirees who may
have experienced a cut in their Social Security benefits.
Additionally, Medicare Part B and Part D premiums continue to rise as health care
costs increase. Medicare enrollees might struggle to pay for their higher
premiums if their Social Security benefits are reduced.
Ensuring Congress finds a solution to Social Security’s insolvency
Social Security benefits cuts aren’t a sure thing and may only occur if Congress
doesn’t take action and implement a solution to the trust fund’s approaching
insolvency. Legislators are working to identify solutions, and they’re weighing
several proposals.
A bipartisan group of senators has proposed the Protecting Retirement
Opportunities and Maintaining Income Security for Everyone (PROMISE) Act, which
would require legislators to identify and vote on a plan to preserve Social
Security’s financial future.
Additional potential Social Security solutions
Legislators are also exploring changing the cost-of-living adjustment (COLA)
formula, which would put more weight on the costs that retirees tend to face,
such as housing and health care expenses. The altered formula might increase
benefits by 2%.
There’s also been discussion of other potential solutions, such as raising the
full retirement age to gradually reduce the program’s spending or increasing or
eliminating the Social Security tax cap to generate additional revenue for the
program. None of these proposed measures have yet passed, and at this time,
Social Security’s future remains uncertain.
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Bottom line
The potential Social Security benefits reduction is a scheduled shortfall that
now lands within many current retirees’ lifetimes, and it’s no longer a far-off
idea that might affect others. Millions of Americans stand to have their
benefits reduced if the trust fund becomes depleted. Though there’s plenty of
discussion about the looming shortfall and Congress is under pressure to
implement a solution, Congress hasn’t yet taken action, and time is starting to
run out.
It’s essential to build some flexibility into your retirement income plan while
this policy fight plays out. Consider the multiple income streams you have
available, and think about stress-testing your retirement
plan to ensure you’re prepared just in case benefits are reduced.
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Author Details
Josh Koebert
Josh Koebert has spent more than 16 years digging into the data behind how Americans earn, save, and retire. As a Senior Data Journalist at FinanceBuzz, his work covers both ends of that challenge: the job market and real estate pressures that shape how much people can save, and the Social Security policies, 401(k) strategies, and retirement income gaps that determine what they’ll actually have when they get there.
