Social Security Benefit Cuts May Cost Americans Up to $138,000
PensionBee modeling reveals the personal cost of accelerated Social Security insolvency
NEW YORK, July 10, 2025 (GLOBE NEWSWIRE) -- Americans have even less time to prepare for looming Social Security benefit cuts. According to the 2025 Trustees Report, the combined Social Security trust funds (OASDI) are now projected to be depleted in 2034, a full year earlier than previously expected. This would trigger an automatic 19% reduction in benefits for all beneficiaries, including retirees and individuals with disabilities.
The situation is even more dire for retirees: the retirement-only trust fund (OASI) is expected to run dry in 2033, resulting in a 23% benefit cut that same year.
For individual Americans, the consequences are stark. New PensionBee analysis shows that replacing the income lost from a 19% benefit cut would require $114,000 in additional retirement savings. A 23% cut would require $138,000 in additional savings to generate the same income, based on the widely accepted 4% retirement withdrawal rule.
Both scenarios would cost Americans more than the median U.S. retirement account balance of $87,000 - highlighting just how unprepared many households are for a fast-approaching financial shock.
Why the Timeline Shifted
This isn’t a change in our modeling - it’s a shift in reality. The new 2034 depletion date reflects recent legislation, including the Social Security Fairness Act, which extended long-overdue benefits to nearly 3 million public sector retirees. While this move was widely welcomed, the $195 billion cost places an additional strain on the broader system, accelerating insolvency across the board.
What This Means for Workers and Retirees
According to the 4% rule, retirees can withdraw 4% of their retirement savings annually while preserving their nest egg throughout retirement. PensionBee modeled how much more different age groups would need to save to offset cuts to an illustrative $2,000 monthly benefit, assuming retirement at 67, 4% annual withdrawals, and 5% annual investment returns (not adjusted for inflation).
Current Social Security projections show two potential timelines:
- 2033: The retirement-only trust fund (OASI) runs dry, triggering a 23% cut to retirement benefits in eight years.
- 2034: The hypothetically combined trust funds (OASDI) are depleted, triggering a 19% cut to all Social Security benefits, including disability payments
Table 1: Estimated additional savings needed by age to offset 23% benefit cut in 2033*
| Starting Age |
Saving Timeline |
Amount Lost |
Monthly Savings Target |
Annual Savings Target |
Total Additional Contributions |
||||
| 55 Years | 12 Years | $138,000 | $701 | $8,416 | $100,992 | ||||
| 45 Years | 22 Years | $138,000 | $288 | $3,455 | $76,010 | ||||
| 35 Years | 32 Years | $138,000 | $146 | $1,753 | $56,096 | ||||
| 25 Years | 42 Years | $138,000 | $81 | $967 | $40,614 | ||||
Table 2: Estimated additional savings needed by age to offset 19% benefit cut in 2034*
| Starting Age |
Saving Timeline |
Amount Lost |
Monthly Savings Target |
Annual Savings Target |
Total Additional Contributions |
||||
| 55 Years | 12 Years | $114,000 | $579 | $6,953 | $83,436 | ||||
| 45 Years | 22 Years | $114,000 | $238 | $2,854 | $62,788 | ||||
| 35 Years | 32 Years | $114,000 | $121 | $1,448 | $46,336 | ||||
| 25 Years | 42 Years | $114,000 | $67 | $799 | $33,558 | ||||
With less time in the market, mid- to late-career workers will need to set aside considerably more to account for the expected benefit cuts. PensionBee's modeling reveals that in both scenarios, the oldest age group (age 55) would need to save roughly nine times as much as the youngest (age 25) to offset the same size benefit cut.
If Congress does not act before 2033, younger workers (age 25) will have over 42 years to save an additional $40,614 to offset the $138,000 lost through a 23% benefit cut. Those at age 55 will have just 12 years to save and will need an additional $100,992 to offset the same cut.
The Unequal Impact of Across-the-Board Cuts
A 19% or 23% across-the-board cut may sound fair, but it won't feel fair. While the vast majority of older Americans are eligible for Social Security benefits, cuts will disproportionately impact lower-income Americans. Social Security replaces a higher percentage of pre-retirement income for low-wage earners than high earners; an identical percentage cut will create vastly unequal impacts.
The Center on Budget and Policy Priorities estimates that Social Security prevents over 22 million Americans from living in retirement poverty, more than any other program. Cuts to the program will harm more than just older adults: the same study found that over 5.7 million children live in households supported by Social Security income.
What Policymakers Must Do Now
Delaying action risks a more disruptive solution down the line. While Americans remain divided on specific solutions, polling reveals a bipartisan consensus on the program's importance.
Recent AARP data reveals that 85% of respondents support maintaining or increasing benefits even if it means higher taxes, with backing across party lines: 75% of Republicans, 90% of Democrats, and 80% of independents prefer revenue increases over benefit cuts.
One thing is clear. The longer lawmakers delay, the more painful the eventual solution becomes for every American.
What Americans Can Do Now
No matter your age, immediate action can provide crucial protection:
- Maximize contributions, especially catch-up contributions for those over 50
- Leverage employer matches and use auto-escalation tools to gradually increase 401(k) contributions
- Consolidate scattered accounts to reduce fees and improve oversight: roll old accounts into an IRA or your current employer's plan
- Diversify investments to manage risk while growing savings
-
Delay retirement to maximize replacement rates
"The accelerated insolvency timeline means Americans have even less time to prepare for what's coming,” said Romi Savova, CEO of PensionBee. “While we can't control Congressional action, we can control our response. Americans who consolidate their retirement accounts and take control of their savings today may be far better positioned to weather potential future cuts than those who wait for political solutions."
Bottom Line
Social Security isn’t a bonus. For most Americans, it’s the foundation of retirement. But that foundation is cracking, and the stakes couldn't be higher. Even before benefit cuts, the U.S. ranked in the bottom third of developed countries for public pension replacement rates. And as it stands now, Americans are looking at roughly 20% smaller benefit checks.
About PensionBee
PensionBee is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages over $8 billion in assets and serves over 275,000 customers globally, with a focus on simplicity, transparency, and accessibility.
Notes
The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.
*Disclosures for Tables 1 & 2
Your investment can go down as well as up.
This data is provided solely for informational and educational purposes. PensionBee Inc. does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PensionBee Inc.’s website or incorporated herein, and takes no responsibility therefore. Nothing presented here constitutes tax, legal, financial or investment advice. This information does not take into account the specific financial, legal or tax situation, objectives, risk tolerance, or investment needs of any individual investor. All information provided is based on publicly available data and research at the time of posting. Any data, statistics, or third-party sources referenced are for educational purposes only and should not be relied upon as sole decision-making tools. This information, and any associated customer testimonial or third party endorsement, does not constitute an offer, solicitation, or recommendation to buy or sell any securities or investments. Your investment is at risk. Past performance is no guarantee of future results.
Source: PensionBee, 2025
Contacts
Adela McVicar
adela.mcvicar@pensionbee.com
PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004.
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