Millions of seniors depend on Social Security to cover the bills in retirement. But this crucial program is about to do something that calls its financial stability into question: tap its trust funds.

If you're not familiar with Social Security's trust funds, they were established years ago and have been padded over time as the program took in excess revenue. That money was then invested in special Treasury bonds that enabled it to grow. This year, though, Social Security will need to dip into its trust funds. And based on the latest Trustees Report, it will continue to do so until 2034 to keep up with its obligations, at which point those funds are expected to run dry. And that's when the real problems will begin.

Older man with serious expression

Image source: Getty Images.

Bye-bye, cash reserves

Just as many of us have individual savings accounts we can access when our income can't cover the bills, so too does Social Security have its trust funds to fall back on. But once those funds are depleted, the program will no longer manage to keep up with scheduled benefits, which means future recipients could see as much as a 21% reduction in the monthly payments they'll have come to rely on. Given the large number of seniors who look to Social Security to provide the bulk of their income, that's a hit millions of retirees can't afford to absorb. But unless Congress intervenes with a fix, that's the reality we're all facing.

Don't count on Social Security

The good news is that Social Security's outlook isn't all bleak. Even without its trust funds, it can continue paying the bulk of its benefits thanks to the money it collects in payroll taxes. Still, those who are already retired and reliant on those benefits could face quite the financial shock if the aforementioned reduction comes to be.

If you're still working, however, there's a bit less to worry about, and that's because you are able to save for retirement on your own and reduce your dependence on Social Security in the future. At present, you can sock away up to $5,500 annually in an IRA if you're under 50, or $6,500 if you're 50 and over. If you have access to a 401(k) through work, you can contribute up to $18,500 a year if you're under 50, or $24,500 if you're 50 or older.

This means that if you're 57 with the goal of retiring at 67, and you max out a 401(k) over the next decade, you'll add $338,00 to your nest egg, assuming your investments grow at an average rate of 7% a year during that time. And that's a good way to make up for the lower benefits you might collect.

If you're younger, you have an even greater opportunity to save for the future, and in a manner that's far less extreme than parting with over $2,000 a month. For example, if you're 32 and want to retire at 67, setting aside $500 a month over the next 35 years will leave you with $829,000, assuming that same 7% average annual return. And that'll certainly help compensate for a drop in benefits.

Remember, Social Security was never designed to sustain retirees by itself. Even if benefits don't get cut in the future, they'll still only replace about 40% of your pre-retirement income. Most seniors, however, need roughly 80% of their previous earnings to live comfortably, which means you must save independently to avoid struggling during your golden years. And the fact that Social Security might face future cuts only underscores this point.

The Motley Fool has a disclosure policy.