Social Security can make or break retirement for millions of older adults. Benefits are a major source of income for 60% of current retirees, according to a 2024 Gallup poll, with an additional 28% saying their benefits are a minor income source.
However, the program isn't as reliable as it once was. Between the dwindling trust funds, loss of buying power due to inflation, and political tension threatening the program's future, it's normal to feel concerned about Social Security's future.
While most of these issues will be out of the public's hands, there are still a few things you can do to protect your retirement. If I could tell everyone one thing about Social Security in 2025, it's this: Have a backup plan.
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Inflation could take a toll on Social Security
One of the biggest hurdles the program's facing right now is inflation. Rising costs have hit many Americans hard in recent years, and the Social Security cost-of-living adjustment (COLA) is designed to help benefits keep up with inflation over time.
Historically, though, inflation has outpaced the COLA -- meaning benefits don't go as far as they used to. According to a 2024 report from nonpartisan advocacy group The Senior Citizens League, benefits have lost around 20% of their buying power since 2010.
Tariffs could potentially exacerbate the issue, too. "Tariffs cause the price of affected goods to rise," Ryan Monarch, economics professor at Syracuse University, recently told The Motley Fool in an interview. "In fact, research into the 2018-2019 trade war has shown that the prices of U.S. imported goods affected by tariffs rose by nearly the entire amount of tariffs imposed."
If prices continue to surge throughout 2025, we could expect to see a larger COLA in 2026. However, given the fact that COLAs have had trouble keeping up with inflation in the past, it could result in an even greater loss of buying power.
The program's cash shortage could lead to benefit cuts
Social Security's trust funds are also quickly being depleted, and benefit cuts could be on the table within the decade.
The program relies heavily on payroll taxes and income taxes on Social Security to fund benefits. However, these income streams have not been sufficient in recent years, leading to a deficit. The Social Security Administration has been pulling money from its two trust funds to bridge the gap, but that money won't last forever.
According to the Social Security Administration's latest estimates, both trust funds are expected to run out by 2035 -- at which point there will only be enough income to cover around 83% of scheduled benefits.
To be clear, the trust funds running out doesn't mean Social Security will go away entirely. As long as the program is still intact and receiving income from taxes by 2035, it will always have at least some cash to pay out in benefits. But as it stands, retirees could expect a 17% benefit cut by 2035 if lawmakers don't find a solution to the cash shortage soon.
Ways to protect your retirement
Social Security is the only source of income many retirees have, and any challenges to the program could hit these Americans the hardest. If you haven't started claiming benefits yet, now is the time to come up with a backup plan in case Social Security continues struggling.
Perhaps the best option is to find another stream of income. This could be from a side job, for example, a rental property, or investing in dividend stocks. There are also many forms of passive income that could help supplement your savings and Social Security.
Another option is to delay claiming Social Security. The average retiree collects around $807 more per month at age 70 than at age 62, according to December 2024 data from the Social Security Administration. While inflation and benefit cuts could still sting, they won't have as much of an impact if you're receiving larger checks to begin with.
Social Security is an integral source of income for many older adults, but it may not be as reliable going forward. By creating a backup plan now, you can be better prepared no matter what the future holds for the program.
