Should I Be Saving for Retirement As Though Social Security Won’t Exist?

The number of Americans who rely on Social Security retirement benefits for at least a portion of their retirement income is significant—as of September 2024, there were 54 million beneficiaries.

However, Social Security beneficiaries could have their benefits reduced in the future. Here’s what pre-retirees should know about the possible benefit cut and how to plan for it.

Key Takeaways

• The Social Security Administration (SSA) estimates that the combined trust funds will only be able to pay full benefits until 2035.
• In 2035, those who receive retirement or disability benefits would have those benefits cut by 17%.
• The SSA announced a plan in February 2025 to trim its staff down from 57,000 employees to 50,000.
• The SSA advises that you’ll most likely need 70% to 80% of your preretirement income to get by in retirement.
• Consider trimming down your current expenses so you can save more dollars in your retirement accounts.

How Social Security Works

Typically, workers have a portion of their earnings withheld from their paychecks which goes towards funding Social Security. These taxes are known as FICA taxes.

The taxes that the Social Security Administration (SSA) collects from the current workers is then paid out to beneficiaries such as retirees and those with disabilities.

If there’s extra money after paying current beneficiaries, that money goes towards the two trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund for retirees and the Disability Insurance (DI) Trust Fund for impaired individuals. Together, these trust funds are referred to as the OASDI fund.

Whenever you pay into Social Security, there’s not an account designated to you specifically. Instead, the income you pay Social Security tax on during your working years earns you credits that are exchangeable for benefits when you retire. Each $1,810 you earn gives you one credit as of 2025. You’ll have to accumulate 40 credits to be eligible for retirement benefits in most cases. That works out to working and paying into the system for 10 years.

Your benefits are then determined by your average earnings and when you collect benefits.

The Social Security Trust Funds

Approximately 85 cents per Social Security tax dollar is sent to the trust funds as of 2025. A small portion is reserved for funding the Social Security system, approximately one cent per dollar. And herein lies the dilemma. It’s anticipated that these trust funds will run dry in the not-too-distant future, resulting in beneficiaries receiving reduced benefits.

The Social Security Administration cites 2035 as the final year that the funds combined will be able to pay 100% of scheduled benefits. It’s anticipated that benefits paid out will drop by 17% at that time.

“Benefits might be reduced if reforms aren’t made,” says Aaron Cirksena, founder and CEO of MDRN Capital, a full-service virtual firm. “It’s a funding imbalance: More retirees are collecting, fewer workers are paying in. The system wasn’t designed for today’s way of living. People are living much longer, the birth rate is down, and we’ve got waves of people retiring.”

Social Security in 2025

The SSA underwent some significant changes in 2025 to comply with President Donald Trump’s Social Security reforms. Its efforts are predominantly aimed at “enhancing customer service, reducing waste, fraud, and abuse, and optimizing its workforce towards direct public service.”

The SSA announced a plan in February 2025 to trim its staff down from 57,000 employees to 50,000. Rumors circulated for a while that the cut would be in the area of 50%, but the SSA has stated that that’s not the case. It also had not permanently closed any of its field offices since Jan. 1, 2025, contrary to another rumor.

How Late Is Too Late?

It’s never too late to start saving for retirement, but it’s better to start early—investing later on can mean having to allocate more of your salary towards retirement.

“While I personally don’t believe that it’s ever ‘too late,’ I think it’s important to be realistic. The later in life you begin planning for retirement, the more aggressive your strategy will need to be. You may have to make some uncomfortable decisions, sacrifices, and big moves to get closer to your retirement goals,” said Steve Sexton, CEO of Sexton Advisory Group in Temecula, California.

Important

The SSA advises that you’ll most likely need 70% to 80% of your preretirement income to get by, at least if you want to do so comfortably.

And yes, you might want to consider what a Social Security benefit cut would look like: If your monthly paychecks were reduced by 17%, would you have enough money saved up to to fund the gap? While Congress could act to resolve the shortfall before the trust fund runs dry, risk-averse savers should consider planning for the worst case scenario.

That might mean putting more money into an individual retirement account (IRA) and 401(k). Try to take advantage of your employer’s 401(k) match, and if you’re eligible, open Roth IRA, as these accounts offer tax-free growth. And if you earn too much to contribute directly to a Roth IRA, you can convert your traditional IRA into a Roth—though you’ll pay taxes when you do the conversion.

The Bottom Line

Given Social Security’s potential woes, you may want to adjust your retirement saving strategy, especially if you’re a more risk averse saver. Try working with a financial professional who can help you understand how a benefit cut starting in 2035 could impact your savings plan, as you may have to save extra to make up for the shortfall. However, if Congress finds a solution to the trust fund depletion, you may not have to worry about a permanent benefit reduction.