Most retirees count on Social Security very heavily, and perhaps more than they should. In fact, over half of U.S. adults who are currently receiving, or who expect to receive Social Security, responded to a Nationwide survey and indicated they could not financially survive missing even half of one benefit.
Retirees' reliance on these benefits is a big problem because there are serious concerns about the program's long-term financial stability. To be clear, benefits are not in danger of running out. But the danger of a very substantial benefits cut is real, and the threat of this occurring gets more serious every day.
In fact, as we move into 2026, the sad reality is that the average retired household is now one year closer to losing $18,400 in Social Security benefits -- which makes up a significant chunk of their monthly income.
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Here's why retirees are at risk of losing a substantial amount of benefits
The big problem retirees are facing now is that the Social Security trust fund is in imminent danger of running dry.
Specifically, an August analysis revealed that because of the implications of the One Big Beautiful Bill Act, the Office of the Chief Actuary estimates that the OASI trust fund could run dry as early as 2032, while the combined trust fund for Social Security retirement and disability benefits could be empty of funds as early as the first quarter of 2034.
As we enter 2026, we're now one year closer to that date, and retirees could face the reality of a depleted Social Security trust fund in the coming years. If that happens, benefits could still be paid out of current revenue being collected, but a substantial cut would be necessary because the Social Security Administration can't access the general fund to cover the shortfall and because revenue collected from current workers isn't enough to pay for all of the promised benefits.
In fact, according to a December analysis conducted by the Committee for a Responsible Federal Budget (CRFB), a 24% cut to benefits could be coming after just seven years. CRFB estimates that cut would lead to a typical retired couple losing a shocking $18,400 per year in Social Security income.
Most households simply can't afford to take such a huge hit, especially as many people don't have enough money in their retirement plans as it is. If retirees end up with such a huge cut, they'll either need to take a lot more money out of their 401(k) or IRA account quickly or will need to make drastic changes to their standard of living to deal with the fact that they are losing close to a quarter of their income.
Will these automatic benefit cuts happen?
It seems hard to believe that lawmakers are going to allow retired couples to lose $18,400 per year, especially at a time when seniors have been hit hard by inflation in the post-pandemic era and are already struggling. However, the big problem is, the longer lawmakers wait to do something about Social Security's financial issues, the harder it becomes.
If lawmakers are going to take steps to shore up Social Security, like changing the full retirement age, they need to do that sooner rather than later, both to let people know so they can adjust their retirement planning process to account for the change and also because the sooner lawmakers act, the more money Social Security can save and the slower the trust fund will be depleted.
Likewise, if lawmakers are going to change tax rules or make other modifications to bring in more revenue, they'd want that money to start coming sooner rather than later. The more time that passes, the more money will come out of the trust fund, and the more expensive the problem becomes to solve.
Unfortunately, it seems likely lawmakers are going to have a hard time finding a compromise as bipartisanship is not very strong during the Trump era, and the president has pledged not to cut Social Security. This leaves few other options on the table, given historic resistance on the part of the right to raise taxes.
Without action, though, Social Security's problems will only get worse, and we'll just get one year closer to the time when that automatic benefit cut happens and devastates retirees' financial security.
