Social Security Cuts: How likely are they to happen?

If you're worried that Social Security is going bankrupt, here's some good news: It is very unlikely to happen. Social Security is funded primarily by payroll taxes. The money that gets taken out of your wages for FICA each pay period? That's funding Social Security. But Social Security is facing some financial challenges that could result in benefit cuts. Here's an overview of what the timing of those cuts could look like, how likely they are, and what you should do to prepare.

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When Social Security benefits could get cut

Social Security faces benefit cuts due to a shrinking workforce. While the program expects payroll tax revenue to continue, it won't be enough to keep up with benefits based on current projections, leaving Social Security to potentially make cuts once it runs out of banked trust fund money.

Last year, the Social Security Trustees said the program's Old-Age and Survivors Insurance (OASI) Trust Fund – the fund that pays retirement benefits – will be depleted in 2033. At that point, incoming payroll taxes are expected to be able to cover about 77% of scheduled benefits, implying an automatic 23% across-the-board cut.

The Congressional Budget Office (CBO), however, has a slightly more pessimistic view. It estimates that depletion of the OASI Trust Fund could occur in 2032, roughly one year earlier than the Trustees' projection. That difference matters because it suggests that lawmakers may have less time to prevent benefit cuts.

A big reason the CBO's timeline differs from the Social Security Trustees is that it accounts for changes under the One Big Beautiful Bill Act, which created a $6,000 senior tax deduction. As a result of that deduction, many Social Security recipients aren't paying taxes on their benefits today. Those taxes are a secondary source of revenue for Social Security, but a notable one. With it shrinking, the timing of benefit cuts gets accelerated.

Related: How will Social Security fit into your retirement income?

How likely are Social Security benefit cuts?

Despite the alarming math, benefit cuts are not guaranteed. And you should know that historically, Congress has repeatedly stepped in before Social Security ever reached that point. Social Security faced a similar funding scare in the early 1980s. Lawmakers responded with a bipartisan package that included payroll tax increases, benefit adjustments, and gradual changes to full retirement age. That intervention restored solvency to Social Security for decades.

This time around, lawmakers have similar tools at their disposal to prevent Social Security cuts. They can raise full retirement age yet again, increase the payroll tax rate, or raise or eliminate Social Security's wage cap, forcing higher earners to pay more into the program.

How to prepare for potential Social Security cuts

Even though Social Security cuts may be avoidable, planning for them is your best move. And there are different ways to do that.

If you're currently retired, it could help to build some part-time income streams to boost your ongoing paychecks. That could mean taking an actual part-time job, starting a business, or joining the gig economy. And, if possible, reducing expenses is apt to help, especially if it allows you to bank some savings.

If you're still working and plan to keep doing so for a while, you're in an even better position to prepare for possible Social Security cuts. The most important thing is to consistently fund an IRA or 401(k) and invest that money strategically. Focus on a broad mix of stocks for maximum growth, but scale back as retirement draws closer to lower your risk profile.

You may also want to consider delaying Social Security once you're eligible to claim benefits. That may seem counterintuitive. But if benefits are indeed reduced broadly, a delayed claim gives you larger monthly checks to work with.

Don't panic too much

The idea of Social Security cuts may be extremely worrisome, whether you're currently collecting benefits or not. The good news is that lawmakers have a lot to lose by letting Social Security reach insolvency. Not only would that likely draw immense backlash, but it could spur a widespread senior poverty crisis Congress would then have its hands full dealing with.

Since Congress has historically acted to prevent benefit disruptions, many analysts expect that pattern to continue. However, the narrowing timeline increases pressure on lawmakers, especially if the CBO is correct in its estimate.

For now, the best thing to do is focus on your own retirement finances and savings and wait for news on Social Security. With any luck, it will be more positive than negative.

This article written for TheStreet by Nifty 50+

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This story was originally published May 13, 2026 at 8:17 AM.