Will Social Security Cuts and Inflation Shrink Your Retirement Benefits? 4 Factors To Consider
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Kerra Bolton
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Cory Dudak
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Social Security will continue to provide income for future retirees, but the amount you ultimately receive may look different than what appears on today’s statements.
Current projections show that once the Social Security Trust Fund’s reserves run short in 2033, the program may only be able to cover about 77% of scheduled benefits unless Congress acts. Rising costs for retirees may also outpace the modest annual COLA increases.
Simply put, if nothing changes, future retirees may only receive about three-quarters of the benefit listed on their Social Security statement. Here’s what’s worth noting before that (potentially) comes to pass.
1. Cuts Could Reduce Benefits by About 25%
Social Security is expected to face a shortfall in about a decade, which means future checks may be smaller. Many assume benefits will disappear when the trust fund runs out, but experts say the program could still bring in enough revenue to cover roughly 77% of scheduled payments.
“There will still be workings paying into the Social Security system through payroll taxes,” said Joe Buhrmann, Senior Financial Planning Consultant at eMoney Advisor, a wealth-management platform. He explained, “Your check isn’t reduced to $0; it’s reduced to $2,310. Yes, that is a reduction, but it’s a long way from zero.”
2. COLAs May Not Keep Up With Inflation
Social Security benefits will rise by 2.8% in 2026, but that increase may not stretch as far as retirees hope. While the annual COLA helps offset inflation, it often falls short of the rising costs older adults face, especially for essentials like housing, Medicare premiums, prescriptions and long-term care.
According to Caroline Raker, a certified Registered Social Security Analyst (RSSA) at Clarity Financial Services, the type of inflation retirees actually feel tends to climb faster than the COLA that Social Security provides each year.
“Costs such as healthcare, housing and insurance often rise faster than COLA adjustments,” Raker said. “So, budgeting for 3% to 4% annual expense inflation is wise, even if COLAs average only 2% to 2.5%.”
3. Delaying Benefits Could Boost Your Monthly Check
Waiting to file for Social Security can meaningfully increase the size of monthly payments. Claiming early locks retirees into a reduced benefit, while delaying past the full retirement age raises the amount received.
“Consider delaying your benefits beyond full retirement age, as doing so increases your monthly check by about 8% per year up to age 70,” said Michael Liner, head attorney and founder of Social Security Disability firm Liner Legal.
Liner added, “It’s also wise to diversify your retirement income with personal savings or investment accounts and to plan for rising healthcare costs, which can eat into fixed incomes more than people realize.”
4. Plan for Higher Future Costs in Retirement
Even with Social Security benefits in place, retirees should expect their living expenses to rise over time. Healthcare, long-term care, insurance and housing often increase faster than general inflation, making it important to build a buffer into retirement plans. One way to prepare is by securing more guaranteed income before cuts take effect.
Jeremy Keil, financial advisor and author of “Retire Today: Create Your Retirement Master Plan in 5 Simple Steps,” said increasing future Social Security income, including by waiting a few extra years to file, can help soften the impact if checks are reduced by roughly 23% in 2033. “This helps you combat the higher living costs, because now you have a 24% higher Social Security that keeps growing with inflation,” Keil said. “Your 401(k) and bank accounts aren’t guaranteed to grow with inflation.”
Other helpful steps include building personal savings, reviewing your budget regularly, accounting for medical and long-term care expenses and keeping some retirement income in accounts better positioned to grow over time.
Bottom Line
While retirees may not receive the full amount projected on their current statements, careful planning can help close the gap. As Yehuda Tropper, CEO of Beca Life Settlements, said, “Pre-retirees should maximize their earnings history, diversify their retirement income sources, and, if at all possible, postpone filing until they are 70. Don’t depend on Social Security alone.”
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