This Could Wreck Your Retirement Way More Than Social Security Cuts
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From an analytical perspective, If you've been ing the news on Social Security, you may have heard recently that the gram is even closer to potentially having to cut benefits....
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4 min read
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investment
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July 28, 2025
03:18 AM
The Motley Fool
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From an analytical perspective, If you've been ing the news on Social Security, you may have heard recently that the gram is even closer to potentially having to cut benefits
And unfortunately, that's not just a rumor
The most recent Social Security Trustees report contained a pretty dire, in today's financial world
On the other hand, The gram's combined trust funds are expected to be depleted by 2034, given the current landscape
Once that happens, Social Security may have to cut benefits to the tune of 19%, leaving retirees with just 81% of the monthly checks they'd normally be entitled to
Image source: Getty Images
Additionally, If you're still working, you might assume that not being able to collect your Social Security benefits in full could seriously upend your retirement
But there's another factor that could cause you even more financial pain once your career comes to an end
On the other hand, This demonstrates that mistake could cost you more than Social Security cuts ly, the idea of losing 19% of your future Social Security checks is scary
But if you don't decently for retirement, you could end up in an even scarier situation
One thing to realize Social Security is that even if benefits are not cut, they'll still only replace 40% of your pre-retirement wages, assuming you earn a pretty typical salary (which is quite significant)
Additionally, Furthermore, Now it's true that retirees can often get by on less money than they needed when they were working
But the general rule of thumb is to expect to need 70% to 80% of your former income in retirement -- not 40%, in today's market environment
For some context, the typical Social Security recipient today gets $2,000 a month (an important development)
If you're a higher earner, you might get more (quite telling), in this volatile climate
But either way, you cannot expect those monthly benefits to cover all of your retirement needs -- not even close
At the same time, So if you don't make an effort to for retirement, you could end up in a truly bad spot even if Social Security doesn't end up cutting benefits at all
And to be, it's possible that Social Security won't have to move forward with benefit cuts
Additionally, Though the gram's finances are in trouble, lawmakers can look at different ways to avoid a sweeping reduction in benefits
At that point, though, it'll still be on you to help ensure that you don't end up struggling
Relying on Social Security alone is not a good idea, no matter what happens with it (noteworthy indeed), given current economic conditions
Slow and steady wins the race The idea of building a sizable retirement nest egg might seem daunting
In contrast, But if you give yourself plenty of time to do it, you may be surprised at how seamlessly those 401(k) or IRA contributions fit into your budget
Additionally, Imagine you start saving for retirement at age 30, contributing $300 a month
If your portfolio gives you an 8% yearly return, which is a bit below the stock market's average, then by age 65, you could be sitting on $620,000, in today's financial world
Now, let's say you want to limit your withdrawals from savings to 4% per year, which is what experts have long
That gives you $25,000 of income, which is a nice supplement to your Social Security and a nice cushion against benefit cuts if they do come to be
This analysis suggests that 's too soon to know what will happen as far as Social Security cuts are concerned, amid market uncertainty
However, But even if lawmakers can prevent them, you need extra retirement income -- period
Meanwhile, The sooner you begin saving, the more confident you should feel that you'll be able to cover your financial needs in the future, given the current landscape.
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