The Social Security Cut Everyone Fears Is Not the Biggest Threat to Your Retirement

Millions of Americans worry that Social Security won't be there when they retire. The Social Security trust funds are projected to run short of reserves in the coming years. If Congress doesn't act before then, incoming revenue could cover only about 78% of scheduled benefits, effectively resulting in benefits about 22% below scheduled levels.

That sounds alarming. A retiree expecting a $2,500 check as part of their retirement plan, for example, could see only about $1,950 instead. That's a difference of $550 a month or $6,600 a year, which could go a long way for seniors on fixed income.

While it's reasonable to pay attention to Social Security's future, the cut that many Americans are bracing for may not be the biggest retirement threat. Here's the biggest risk.

Why Social Security is under pressure

Social Security is a pay-as-you-go system, meaning today's workers pay payroll taxes to fund today's retirees' benefits. The problem is that the ratio has changed radically over the decades.

In 1945, nearly 42 workers' payroll taxes covered one person collecting benefits, according to Social Security Administration data. Today, the ratio has fallen to about 2.6 workers per beneficiary as Americans are living longer, having fewer children, and spending more years in retirement.

There are fewer workers for each retiree, putting increasing pressure on the program's finances. That demographic shift is the main reason Social Security could have long-term funding challenges.

This is a projected cut, not a done deal

This is not an enacted cut in benefits. That's the estimated funding shortfall if Congress fails to act. There are a number of levers that Congress could pull to change the outcome.

Congress can shore up Social Security by raising the payroll tax, raising the taxable wage cap, adjusting benefits, or combining several reforms. Historically, lawmakers have stepped in before the program reached insolvency.

While the Social Security cut is real and worth preparing for, it might never fully materialize as it presently appears in projections. That uncertainty is part of the reason it shouldn't be the only thing keeping you up at night.

Why undersaving may be the bigger threat

Even if the full 22% cut actually happens as projected, it probably wouldn't be the biggest threat to most people's retirement. The real threat is that many people are undersaving for retirement.

According to a retirement confidence survey conducted by the Employee Benefit Research Institute and Greenwald Research, the percentage of Americans who feel confident they will have enough money to live comfortably in retirement fell to 64%. The future of Social Security and Medicare benefits, the rising cost of living, and debt are some of the major concerns cited by the respondents.

A new report from the National Institute on Retirement Security also found that American workers ages 21 to 64 have less than $1,000 saved for retirement. That could pose an even more immediate retirement risk than a potential future Social Security cut.

This is because Social Security was never meant to be your only retirement plan. It was built as a supplement, not a replacement for personal savings. The average Social Security retirement benefit as of June 2026 is about $2,084 a month, or about $25,000 a year. That alone isn't enough to cover the typical retirement expenses for most households.

Even generous benefits may not be enough

Consider someone who has done better than average. Say, for example, they receive $3,500 a month in Social Security, or $42,000 annually, well above the average retirement benefit.

Assume they retire with a $500,000 nest egg. Using the 4% withdrawal rule, that could mean an additional $20,000 in retirement income.

Combined, that's $62,000 annually. And that's before considering inflation, rising health care costs, unexpected expenses, or the possibility of living well into your 90s. Whether that's enough depends on the household's pre-retirement income, expenses, lifestyle, and other sources of retirement income.

Bottom line

No single individual can dictate what Congress will do on Social Security benefits once the reserves run out. But you have control over almost everything else in your retirement plan.

If you're falling behind on savings, increasing contributions to a workplace retirement plan or IRA, even by a small percentage, can make a meaningful difference over time thanks to compound growth. Paying off high-interest debt and investing raises or bonuses instead of spending them can also help you accelerate progress.

You may also want to consider working an extra two or three years as you approach retirement. This way, you'll have more years to save, fewer years for your portfolio to support you, and perhaps larger Social Security benefits if you delay claiming.

The sooner you start ramping up your savings, the more prepared you'll be regardless of what happens to Social Security.

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