The Social Security Cut Everyone Fears Is Not the Biggest Threat to Your Retirement
Key Points
Social Security is vital to most retirees, and a cut will be bad news.
Millions have not saved nearly enough for retirement, and that could hurt them more.
Fortunately, it's probably not too late to improve your future retirement.
Social Security is facing a funding shortfall -- and, therefore, retirees are facing a possible reduction in income. It may not happen because there are ways to bolster the program, but right now, it's headed for trouble.
That may be alarming, but it's probably not the biggest thing to worry about in your retirement.
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What's going on with Social Security?
Social Security works by collecting taxes from workers and using the revenue to pay benefits to retirees. The system has worked so well for many decades that Social Security has long run a surplus.
But that surplus is running dry. With more people living longer and retiring earlier, Social Security is paying out more than it collects. Check out how the ratio of workers to Social Security beneficiaries has shrunk over time.
Year |
Ratio of Covered Workers to Beneficiaries |
|---|---|
1945 |
41.9 |
1955 |
8.6 |
1975 |
3.2 |
1985 |
3.3 |
1995 |
3.3 |
2005 |
3.3 |
2015 |
2.8 |
2020 |
2.7 |
2025 |
2.6 |
2035* |
2.3 |
Data source: Social Security Administration.
*projected, in the 2025 Social Security Trustees report
If nothing is done to strengthen it, the surplus in Social Security's trust funds will run out within a few years, resulting in benefits shrinking to around 78% of the amount due to beneficiaries.
So you might not get your full, earned benefits in retirement. You might only get around 78% of them -- or less. If you're expecting $2,500 checks in your first year of collecting Social Security, you might end up with only $1,950.
Fortunately, there are multiple ways to save Social Security, should Congress decide to do so. But even if it doesn't, that 22% cut in your benefits should not be your biggest worry.
What's the bigger threat to your retirement?
Instead, worry about whether you're on track to have saved enough for retirement by the time you retire. According to the 2026 Retirement Confidence Survey, millions have not.
Amount in savings and investments* |
Percentage of workers |
|---|---|
Less than $1,000 |
22% |
$1,000 to $9,999 |
7% |
$10,000 to $24,999 |
7% |
$25,000 to $49,999 |
5% |
$50,000 to $99,999 |
11% |
$100,000 to $250,000 |
14% |
$250,000 or more |
35% |
Data source: 2026 Retirement Confidence Survey.
*excluding the value of a primary home
Yes, you'll have Social Security, but even if benefits aren't reduced at all, typical benefits aren't that substantial. As of June, for example, the average monthly retirement benefit was just $2,084 -- or about $25,000 annually.
If you want an initial retirement income of, say, $80,000 annually, even if your Social Security benefits are well above average at $3,500 per month, that's just $42,000 for the year. If you retire with a nest egg of $500,000, and you plan to withdraw 4% annually, that's just another $20,000.
What to do
To build a better retirement, be sure to have a solid retirement plan and to execute it. You may need to save and invest a lot more. You may want to delay retiring for a few years, too. Look into what strategies will serve you best if you're behind in your retirement savings.
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