Retirement Social Security

How 2026 Quietly Pushes Retirees Toward an $18,400 Loss in Benefits

How your benefits may be cut 24% and what steps you can take to minimize this impact.

By Lee Huffman

Edited by Laura Hohenstein

Updated Jan. 13, 2026

Social Security benefits are not facing an immediate cut, but the program is moving closer to a serious funding crisis. As payouts to retirees, the disabled, surviving spouses, and others exceed the payroll taxes collected, current and future Social Security recipients who are planning for retirement are moving closer to benefit cuts.

According to the Committee for a Responsible Federal Budget (CRFB), depletion could trigger across-the-board benefit cuts of about 24% as early as the 2030s. For the average retired couple, that would mean losing roughly $18,400 in Social Security income every year.

Here's what you need to know about potential Social Security benefit cuts, why they're a problem, and what you can do about it.

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What the $18,400 loss in Social Security benefit cuts represents

The $18,400 figure is not a lifetime total. It is an annual reduction that averages out to about $1,500 per month for the average retired couple.

This level of reduction would occur if the Old-Age and Survivors Insurance (OASI) Trust Fund were depleted, Congress failed to close the funding gap, or benefits were limited to what ongoing payroll tax revenue could support.

Under federal law, the Social Security Administration cannot borrow from the general fund. Once the fund that pays out retirement and survivors' benefits is exhausted, benefits must be cut immediately to match incoming revenue.

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Why 2026 is a potential turning point

This year is not when the account runs dry. However, every year that Congress doesn't act, the harder it will be for them to make meaningful changes to Social Security and spread the impact over time. More specifically, as time passes, the balance continues to shrink, lawmakers have fewer options to spread changes out gradually, and the size of the eventual cut grows larger.

CRFB estimates that if lawmakers wait until depletion, benefit cuts would need to be sudden and severe rather than phased out over a number of years.

How depletion leads to benefit cuts

Social Security is funded primarily through payroll taxes paid by current workers, income earned on investments, and withdrawals from the fund to cover shortfalls when taxes don't fully cover benefits.

Once the account is depleted, the only source for Social Security payments is the payroll taxes collected from workers. According to the Social Security Trustees, scheduled benefits exceed incoming payroll tax revenue by about 24%. Without the ability to make withdrawals to fill the gap, benefits must be cut to match what the system brings in each year.

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What a retired couple could lose with a $18,400 Social Security cut

Consider a typical retired couple receiving about $76,700 per year in combined Social Security benefits. A 24% reduction would lower their annual income by roughly $18,400, leaving them with about $58,300 per year.

A significant reduction in Social Security benefits could have profound effects on retirees. For many, losing out on $18,400 (or about $1,500 per month) in Social Security income each year could mean:

Covering Medicare premiums with less income
Drawing down savings faster
Paring down your lifestyle, including delaying medical procedures, house repairs, and other major purchases
Re-entering the workforce

Typically, when Congress passes a law that changes Social Security benefits, the cuts often impact current workers the most. Those who are already retired are often spared completely, or there are minimal changes to benefits. When the Old-Age and Survivors Insurance (OASI) Trust Fund runs out, these cuts would apply to all beneficiaries, including those who have already retired.

Why current retirees are still at risk

A common misconception about Social Security is that "current retirees are safe." Unfortunately, that is not true. Social Security does not permanently lock in benefit levels. Once the fund is depleted, everyone receives the reduced payout, regardless of their age or when they started claiming benefits.

Steps current and future retirees can take now

While retirees cannot control Congress, they can take action now to defend their retirement finances. Key actions to consider ahead of changes in Social Security benefits:

Contact your Congressional representatives and demand they take action
Stress-test your retirement budget with a 20% to 25% Social Security cut
Build or preserve cash reserves where possible
Boost contributions to retirement plans and brokerage accounts to increase your nest egg
Seek out alternative sources of income to diversify your retirement plan
Coordinate Social Security income with Medicare premiums and taxation
Avoid assuming COLAs will offset benefit cuts
Delay claiming benefits to increase your monthly checks

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Bottom line

Talking about the Social Security benefit cuts of $18,400 per year is not meant to scare you. It is the likely outcome of what will happen when the Old-Age and Survivors Insurance (OASI) Trust Fund runs dry under current law. In 2026, we are one step closer to the moment when delay becomes damage. While these cuts are not imminent, you can take steps today to minimize the damage to your finances. Practical steps you can take include reducing your expenses, eliminating debt, saving more money, and earning extra money.

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