New Analysis Reveals $100k Price Tag for Expected Social Security Cuts in 2035

New research from retirement provider PensionBee highlights the real cost of the expected 17% cut to Social Security benefits starting in 2035, unless Congress takes action. Americans could need an extra $100,000 in retirement savings to make up the shortfall, posing a significant financial challenge for millions.

Without intervention, the combined Social Security trust funds (OASDI) are forecasted to be fully depleted by 2035. The anticipated result is an across-the-board reduction of 17% in monthly benefits. For the average retiree, receiving $1,980 monthly, a 17% cut translates to losing $336 per month, or $4,039 per year.

To maintain some income in retirement, workers would need to save an additional $100,980, based on the 4% rule - a figure that surpasses the current median retirement account balance of $87,000.

According to the 4% rule, which captures the ratio between annual withdrawals and total retirement savings, retirees can take 4% out of their accounts each year, regardless of size, and leave enough behind to sustain them for the duration of their retirement.

Let’s break it down with the following assumptions:

• You are retiring at age 67
• You will withdraw 4% of retirement savings a year, a common benchmark for sustainable savings
• Investments generate an assumed 5% rate of return without inflation

Table 1: Estimated Additional Savings Needed by Age to Offset the 17% Benefit Cut in 2035*

Starting Age	Saving Timeline	Annual Benefit Reduction	Total Additional Savings Needed	Annual Savings Target	Monthly Savings Target
25 Years	42 Years	$4,039	$100,980	$708	$59
35 Years	32 Years	$4,039	$100,980	$1,282	$107
45 Years	22 Years	$4,039	$100,980	$2,528	$211
55 Years	12 Years	$4,039	$100,980	$6,158	$513

“The longer you have to prepare, the more manageable the impact of potential cuts - and the less you need to contribute in total,” said Romi Savova, CEO of PensionBee. “Younger savers may only need to contribute a few dollars a week, while older workers face a much steeper challenge.”

For example, while a 25-year-old, using the assumptions set out above, would need to put away only $59 a month, a 55-year-old would need to save nearly 9x as much a month to offset the same benefit.

Worse, with less time in the market, the average 55-year-old would need to contribute $73,896, while a 25-year-old would need to find just an additional $29,736 over their longer saving timeline.

Younger Generations Fear Worst-Case Scenario

While a 17% cut is the most widely expected outcome, concerns about the solvency of Social Security have persisted for decades. NORC and AP research found that the majority of adults under 45 doubt that Social Security will be there for them when they retire. Under current law, Social Security will not go fully bankrupt. However, broad anxieties about total insolvency underscore how critical Social Security benefits are.

A Lifeline Millions Rely On

Today, nearly half of American households (46%) have no retirement savings. Among those aged 55-64, the median balance is just $104,000, or roughly the amount needed to offset the anticipated cuts to social security.

“Social Security is the backbone of retirement income for most Americans,” said Savova. “These figures highlight a stark reality: retirement is a personal responsibility, and the safety net is getting thinner.”

The disappearance of Social Security would represent the most significant financial disaster for Americans in generations. If Social Security became fully unavailable, future retirees would need an additional $594,000 to replace an average benefit of $23,760.

Following the same assumptions as above, a 55-year-old worker would need to save an additional $3,019 a month or $36,226 annually for 12 years to cover their full benefit.

The average U.S. salary is $5,161.36 a month, meaning that without Social Security, many older workers would need to save the majority of each paycheck just to cover lost benefits, or face the prospect of working until the end of life.

What Americans Can Do Now

No matter where you are in your career, taking steps today can help insulate you from future benefit reductions:

• Maximize contributions, especially catch-up contributions for those over 50.
• Leverage employer match programs for 401(k)s and use auto-escalation tools to gradually increase contributions over time.
• Consolidate your accounts to track progress and reduce fees. You can roll over old accounts into an IRA or your new employer’s plan for added oversight.
• Diversify investments to manage risk and grow savings.

Bottom Line

The 17% Social Security benefit reduction expected in 2035 is not a remote theoretical possibility but a widely expected outcome. The best way to prepare is to act now.

The earlier you prioritize saving for your retirement, the less disruptive these changes will be to your financial future. Taking control today can provide the peace of mind needed for a secure retirement, no matter what happens in Washington.

*Disclosure for Tables 1

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

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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