Retirement Social Security

A 22% Social Security Cut Could Hit - Make Sure You Do This

Social Security benefits could be broadly reduced, and the sooner you prepare, the better.

By Maurie Backman , Edited by Laura Hohenstein

Updated Sept. 25, 2026

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Social Security is one of the most important senior benefits today. And if you're planning to retire on just Social Security, you may need to prepare to reduce your spending and make other sacrifices.

You should also know that the Social Security benefit you expect to collect in retirement may not be the exact amount you actually receive. Due to an impending shortfall, Social Security faces the possibility of a 22% benefit cut by the end of 2032. Lawmakers have never allowed Social Security to cut benefits before, and they may be able to prevent them this time around, too. But it's still important to prepare.

Here are some ways you can set yourself up with retirement income outside of Social Security so that if benefits are reduced, your plans won't be totally upended.

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Build a solid nest egg

If you manage to retire with a nice amount of savings, a 22% Social Security cut may not hurt you so much. But to build a strong nest egg, your best move is to start early. If you begin contributing regularly to a retirement account early in your career, your savings should have extra time to grow.

Now it's not a given that your workplace will offer a 401(k) plan to contribute to. If not, you can open an IRA at any financial institution and contribute on a schedule that works for you. You could send money into your IRA on a weekly basis, monthly, or quarterly.

If you do have a 401(k) plan, find out if your company provides some type of match. If you contribute to your workplace retirement plan out of your own paychecks, you might get some free money from your employer to help grow your balance each year.

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Choose the right investments

The right investment mix could set you up with plenty of ongoing income so that if Social Security is cut, you're still able to keep up with your costs. Dividend stocks are a good option to consider because you can benefit from not just dividend payments, but share price growth over time.

Another good option to look at for retirement is bonds, since their prices tend to be more stable than stocks. And even though bond prices can fluctuate, if you hold your bonds to maturity, you can get your principal back while collecting interest payments along the way.

Set yourself up to be able to continue working

There's no rule stating that you have to stop working once you're retired. You may not want to put in 40 hours a week, but a part-time job or consulting work could leave you with plenty of free time to enjoy while also helping you make up for smaller Social Security checks.

If your intent is to work in retirement, though, there are steps you should take ahead of time to make that happen. If your goal is to consult in your former field, spend some time building a strong list of contacts. If you're more interested in starting your own business, talk to other small business owners to understand the challenges.

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Use a larger home to your advantage

Many older Americans opt to downsize once they reach retirement. But if you have a larger home, you may be able to monetize it strategically and use those funds to supplement your Social Security checks.

One option is to rent out a finished basement, garage, or any separate living area in your home. Another option is to rent out rooms on a seasonal basis, such as if you're close to a beach or situated in a college town.

If you don't want a permanent tenant under your roof, you could rent out your home when you don't plan to occupy it. For example, let's say you have a lot of family out of state you visit a few times a year. If you live in a popular city, you could list your home on a site like Airbnb and try to find short-term tenants for the times you'll be away.

Bottom line

If living on just Social Security is your plan for retirement, potential benefit cuts could be a huge problem. And while lawmakers have always managed to prevent Social Security cuts in the past, there's a chance cuts won't be fully avoidable this time around.

In light of that, it's important to do what you can to supplement your monthly benefits. And the sooner you start strategizing and taking action, the better. Building savings, for example, is much easier when you start in your 20s or 30s as opposed to your 40s or 50s. That gives your money more time to grow, which means modest monthly contributions could amount to a large sum.

Even if Social Security benefits aren't reduced, if you set yourself up with extra retirement income, your senior years will be that much more comfortable. So you stand to win either way.

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