How Much Would Social Security's 2032 Shortfall Cost You?
The SS trust fund will be insolvent in 2032 and will have to reduce benefits by 22%. Here is how much more you need to save to cover the shortfall, by age.
The health and stability of the Social Security system are on the minds of Americans who are nearing or in retirement. More than half of Americans who aren’t yet retired lack confidence that they'll have the same Social Security benefits as current retirees, according to a study from the National Institute for Retirement Security (NIRS).
Just 31% of Gen Xers and 28% of women are very confident they’ll have the same benefits as current retirees, the study showed, while 52% of boomers and 49% of men are very or somewhat confident they'll have the same benefits as previous generations.
Is there a real reason to worry that future Social Security benefits could be reduced? Unfortunately, the answer is yes. There is a shrinking window of opportunity to shore up the Social Security trust fund; in 2032, about 8 years from now, the trust will be insolvent and unable to pay full benefits. At that point, if nothing else is done, the program could pay about 78% of scheduled benefits, mostly out of workers’ ongoing contributions.
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Let's be clear about one thing: Social Security is not going bankrupt and will not stop paying benefits. The majority of benefits are paid with current contributions to the trust fund. Unless people stop paying their employment taxes, there will be income to fund benefits. At worst, there will be reduced benefits, with beneficiaries receiving only 78% of their full benefit. The average retiree received $2,082.76 in May, and a 22% cut would translate into losing almost $458.21 per month, or $5,498.50 per year.
How much more do you need to save to cover the possible reduction in benefits? Well, almost $150,000. Let's break that down and see how much you'll need to sock away, based on your age, which will dictate your saving timeline.
How much more you need to save
As the Social Security trust fund moves closer to insolvency with no solutions on the horizon, let's look at how much more you need to save, monthly and annually, to cover any reduction in benefits.
"Projected insolvency is not hypothetical," Romi Savova, Founder and CEO of PensionBee, told Kiplinger. "Congress will need to act, and making this a policy priority today will give Americans more time to plan."
Fortunately, the people at PensionBee crunched the numbers to produce their 2026 Social Security Shortfall Index. They concluded that workers would need to save an additional $137,280 to generate the same income, based on the 4% rule withdrawal rule.
This will be critical, as the median retirement savings for all families is $87,000, according to the Federal Reserve's Survey of Consumer Finances.
PensionBee used the following assumptions when it calculated how much more you'll need to save to make up for possible cuts to Social Security benefits:
- You are retiring at age 67 (the full retirement age (FRA) for anyone born in 1960 or after)
- You will withdraw 4% of your retirement savings each year
- Investments generate an assumed 5% rate of return without inflation
Now, let's look at how much more you have to save to offset a future drop in Social Security benefits.
According to the 2026 Social Security Trustees Report, the trust fund's insolvency date has moved up one quarter to the fourth quarter of 2032. If this happens, benefits face a sudden 22% cut.
The older you are, the more you'll need to save. A 55-year-old has just a 12-year window and must save an extra $842 a month — roughly 8 times more than what the youngest workers need to save, according to PensionBee. As the chart below shows, starting early substantially lowers your monthly savings target.
"The accelerated insolvency timeline means Americans have even less time to prepare for what's coming,” said PensionBee's Savova. “While we can't control Congressional action, we can control our response."
Starting age (projected cut) | Saving Timeline | Savings needed to offset cut | Monthly Savings Target | Annual Savings Target |
|---|---|---|---|---|
61 years (22%) | 6 Years | $137,280 | $1,772 | $21,270 |
55 years (22.1%) | 12 years | $137,700 | $824 | $9,890 |
45 years (24.1%) | 22 Years | $150,600 | $432 | $5,179 |
35 years (28.3%) | 32 Years | $176,800 | $304 | $3,653 |
25 years (32.9%) | 42 Years | $205,500 | $234 | $2,811 |
What can you do now to save that additional $138,000?
- Max out your retirement contributions. Especially catch-up contributions for those over 50 and super catch-up limits for those 60 and over
- Leverage employer match programs. Don't leave any money on the table. Soak up the full employer match to plump up your 401(k)s and use auto-escalation tools to gradually increase contributions over time and bump up your contribution percentage when you get a pay raise.
- Consolidate your investment and retirement accounts. Fewer accounts will make it easier to track your progress and reduce the fees you pay.
- Diversify investments. Managing risk is part of growing and protecting your savings.
Insecurity about Social Security is a uniting issue for Americans
How concerned are people feeling? The results of a recent study say it all — more Americans (64%) are scared of running out of money in retirement than of dying, according to the 2025 Annual Retirement Study from the Allianz Center for the Future of Retirement. Those feelings have been bolstered by action, as more Americans decide to file for Social Security benefits earlier than planned.
That may be why a majority of Americans in every category surveyed want Congress to take action and not wait any longer to do something to address the looming trust fund insolvency. When the NIRS posed the question, "To what extent do you agree or disagree that Congress should act now to shore up Social Security funding rather than waiting another 10 years," it was a chorus of agreement across demographic groups:
- By sex: men 86%, women 86%
- Political affiliation: Democrats 88%, Republicans 86%, Independents 88%
- By generation: Boomers 93%, Generation X 88%, Millennials 82%
- By annual income: Less than $35k was 89%, between $35 and $74k was 86%, and more than $75k was 88%
The biggest divide was among generations. It's not surprising that those closest to retirement want to see the Social Security trust fund issues dealt with sooner rather than later. The overall unity in wanting to see action may finally spur some action.
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