Social Security’s projected funding shortfall is raising alarms for nearly 70 million Americans.
The 2025 Social Security Board of Trustees projects that trust funds supporting retirement and disability benefits will run out by 2033, triggering automatic 23% benefit cuts for current and future retirees, as we detailed in “Here’s What Will Happen When Social Security and Medicare Funds Run Dry.”
Based on that projection, TheStreet reports that the typical retiree could lose more than $4,000 annually, for a total of at least $100,000 over the course of retirement. That financial gap is one many households may struggle to cover.
The ripple effect of smaller Social Security checks
As the cost of living continues to rise, a smaller Social Security check may require some households to reassess spending on essentials such as housing, medication, and groceries.
The median retirement savings account holds just $87,000, TheStreet warns — an amount that may be insufficient to bridge a six-figure income gap, particularly amid ongoing inflation and rising health care expenses.
Your timeline shapes your strategy
Younger workers have more time to adjust. A 25-year-old would need to save an additional $35 per month — or about $708 annually for the next 42 years — to make up the projected $100,000 shortfall, according to projections detailed by TheStreet.
A 45-year-old would need to increase annual retirement contributions by more than $2,000, while someone at 55 would need to save an extra $6,000 per year. The earlier the planning begins, the more manageable the adjustments may be.
Proactive moves to take before 2033
Retirement is increasingly a personal responsibility, especially as Social Security faces projected cuts. Retirees and workers alike may need to adjust their financial plans in several ways:
- Increase personal savings. Boost 401(k) and IRA contributions to help fill the gap left by potential benefit reductions.
- Start early. The earlier you begin contributing, even modestly, the more time your savings have to grow and offset potential benefit cuts.
- Reevaluate retirement expectations. A substantial drop in Social Security income by 2033 could force many households to rethink how they’ll afford basic expenses.
As PensionBee CEO Romi Savova said earlier this year, “Retirement is a personal responsibility, and the safety net is getting thinner.”
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