Retirement Social Security

Social Security Could Be Headed for Cuts: How Retirees Can Prepare

Benefit cuts aren't a given, but it's important to gear up for them, just in case.

By Maurie Backman , Edited by Laura Hohenstein

Updated May 20, 2026

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Many retired Americans today collect Social Security. And a lot of people's retirement plans hinge on those monthly benefits.

But Social Security is facing a major revenue shortfall in the next decade. The program relies on payroll taxes for most of its revenue. But in the coming years, as baby boomers retire in droves, that revenue stream is expected to shrink. Once that happens, benefit cuts could be inevitable.

While lawmakers have never allowed Social Security to cut benefits before and have different options for preventing cuts this time around, it's important to prepare for your monthly checks to shrink, just in case. Here's how to gear up as a retiree.

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Start budgeting carefully

If you get most or all of your retirement income from Social Security, benefit cuts could be devastating to your finances. So it's important to get a handle on your spending and understand where your money is going.

To do that, you'll want to set up a budget that accounts for your retirement expenses. Your budget should include recurring expenses like:

Rent or mortgage payments
Property taxes
Car payments and gas
Food
Health care premiums
Medication
Phone service

It should also account for once-a-year expenses, like insurance premiums you might pay annually. Seeing what you spend money on could help you find ways to reduce your costs.

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Commit to cutting spending

Once you have a budget, it may be easier to identify expenses in your budget that you can reduce. And it pays to do that ahead of Social Security cuts.

You might think you can wait for benefit cuts to happen to start spending less. But if benefits shrink universally, it will help to have savings to tap to supplement your monthly checks. So the sooner you begin cutting your spending, the sooner you can start building some savings.

Not only that, but if you're able to reduce your spending meaningfully, you can potentially invest some of the money you're saving in assets that pay you on a regular basis, like bonds. You could also start a stock portfolio that could gain value through the years and pay dividends you use as retirement income.

Downsize your home

Homeowners ages 65 and over have a median of $250,000 in home equity, according to the National Council on Aging. Downsizing into a smaller home could make it possible to pocket some of that equity and turn it into a retirement nest egg you use to supplement your Social Security checks if they get reduced.

Even if you don't have a lot of equity in your home, downsizing could still reduce many of your recurring expenses, like utilities, homeowners insurance, property taxes, and maintenance. Those savings could be crucial if you're forced to start living on less.

Just make sure downsizing doesn't open the door to hidden costs. You might assume that selling a house and buying a condo will save you lots of money. But if your condo comes with heavy maintenance or HOA fees, your savings could be whittled down substantially.

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Relocate to a cheaper part of the country

Some parts of the country are less expensive on the whole. It could pay to relocate to a state where you can live comfortably as a retiree on less money.

If you move somewhere less expensive, you might save on everything from food to gas to entertainment. You might also manage to reduce big expenses like rent and property taxes.

That said, if you're serious about relocating, do your research. It's important to relocate to an area where you have access to a good health care system and other amenities that are important to you.

Go back to work

If you've been retired for quite some time, the idea of going back to work may seem daunting. But it's a good way to build savings and boost your income, which may be a crucial thing if Social Security ends up getting cut.

The good news is that thanks to the gig economy, working in retirement doesn't have to mean going back to a clock-punching routine. You can moonlight as a pet sitter, sign up to drive for a rideshare service, or do consulting work in your former field. You could even try to find a creative job that pays, like setting up a website and selling homemade crafts.

Bottom line

Not preparing for potential Social Security cuts is a surprising retirement mistake you might sorely regret. While it's true that lawmakers have banded together to prevent Social Security cuts in the past, they're not guaranteed to be able to do the same thing this time around.

Even if Social Security cuts do end up being preventable, these changes could improve your retirement finances tremendously. So it pays to consider at least some of them, especially if you've been struggling to pay your bills.

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