What If Social Security Runs Out? A Guide for Retirees
By Tyler Plack
Tyler Plack is the President of South River Mortgage. Tyler holds an active FHA Direct Endorsement (DE) underwriting certification and is the author of The Retirement Solution: Maximizing Your BenefitTyler is a seasoned entrepreneur and real estate investor renowned for his expertise in reverse mortgages and his commitment to addressing seniors' equity challenges. Tyler brings a unique perspective to his ventures, having built several successful companies throughout his career. His insights are frequently sought by industry publications, where he is recognized for his vast knowledge in the realm of reverse mortgages.
An avid investor in income-producing properties, Tyler is dedicated to helping seniors navigate their financial needs with compassion and expertise. When Tyler is not helping solve America's retirement crisis, he is a skilled pilot flying airplanes for fun.
A Social Security Guide for Retirees
What If Social Security Runs Out? First, the Good News The Timeline for Social Security Changes Why This Matters for Your Retirement Plan What a 25% Cut Looks Like How to Prepare for the “What If” Where a Reverse Mortgage Fits In FAQs
For decades, Social Security has been a bedrock of retirement planning in America. You’ve paid into it your whole working life, with the understanding that those benefits will be there when you need them.
But every so often, headlines warn that the Social Security trust fund is “running out of money.” That can make anyone nervous—especially if you’re already retired or getting close.
So… what would really happen if Social Security ran out? And what can you do now to protect your retirement lifestyle?
First, the Good News
Despite the doom-and-gloom headlines, Social Security isn’t going to vanish overnight.
The current projections say the trust fund could be depleted in the next decade or so, but that doesn’t mean benefits go to zero. Even if the trust fund is exhausted, the program would still collect payroll taxes from workers, which could cover about 75% of scheduled benefits.
That’s the real risk: not losing Social Security entirely, but having your monthly check shrink. For many retirees, that’s still a serious problem—especially if you rely on those funds to cover essentials.
The Timeline for Social Security Changes
The Social Security Administration projects that the trust fund reserves could be depleted around 2033 if no action is taken.
After that point, payroll taxes would still cover roughly 75% of scheduled benefits — meaning retirees could see a cut of about 25% if Congress doesn’t step in.
Historically, lawmakers have always acted to strengthen the program before major shortfalls hit — by raising payroll taxes, gradually increasing the full retirement age, or adjusting benefits for higher earners.
While no one knows exactly what form the next fix will take, it’s important to plan as if cuts could happen.
Why This Matters for Your Retirement Plan
If Social Security were your only source of income, a 25% cut could mean having to:
- Downsize your home or move somewhere cheaper
- Delay medical procedures or home repairs
- Cut back on travel, hobbies, or helping family
Even if you have other savings, the loss of guaranteed income can put more pressure on your nest egg, making it run out sooner than planned.
What a 25% Cut Looks Like in Real Life
For context, the average monthly Social Security benefit in 2025 is about $1,900. A 25% cut would reduce that to roughly $1,425 — a loss of more than $5,500 per year.
That difference could mean tightening your budget, postponing travel, or dipping more heavily into savings just to cover essentials.
Having a plan to replace that income gives you control over your lifestyle rather than leaving it to chance.
How to Prepare for the “What If”
No one can predict exactly how Congress will handle Social Security’s future. But you can take steps to make sure your retirement doesn’t hinge entirely on political decisions:
- Diversify your income streams – Pensions, investments, part-time work, rental income—each one adds a layer of security.
- Lower ongoing expenses – Reducing debt and cutting unnecessary costs gives you more breathing room.
- Make your home work for you – For many retirees, the largest untapped source of wealth is their home equity.
Additional Safety Nets
In addition to diversifying income and cutting expenses, consider building a financial cushion now. Setting up a reverse mortgage line of credit early — even if you don’t use it right away — allows the available credit to grow over time.
That way, you’ll have a ready-made backup source of funds if benefits are cut in the future.
Where a Reverse Mortgage Fits In
If you own your home and are 62 or older, a reverse mortgage can be a powerful safety net—especially if Social Security changes in the future. It allows you to access the equity you’ve built, tax-free, without giving up ownership or moving out.
You can take the money as a lump sum, monthly payments, or a line of credit that grows over time—so it’s there if and when you need it.
That means if your Social Security check ever gets cut, you already have a backup plan to cover essentials, maintain your quality of life, and avoid dipping too deeply into your savings.
At South River Mortgage, we’ve helped thousands of retirees create this kind of financial cushion. And with today’s housing values, there’s a good chance you can unlock more equity than you think.
See how much you could qualify for in minutes.
FAQs
Will Social Security really run out of money?
No. Even if the trust fund is depleted, payroll taxes from current workers will continue to fund about 75% of scheduled benefits. The risk is a partial cut, not a total shutdown.
When could cuts happen?
Current projections suggest around 2033. Lawmakers may act before then to shore up the program.
What are some likely fixes?
Options include raising the payroll tax cap, gradually increasing the full retirement age, or adjusting benefits for higher earners.
How can a reverse mortgage help if cuts happen?
A reverse mortgage can provide a steady stream of tax-free funds or a line of credit you can draw from only when needed, helping you cover essentials without depleting your other savings.
Should I wait until cuts happen to set up a reverse mortgage?
Not necessarily. Setting one up earlier locks in today’s interest rates and allows the line of credit to grow over time — which can give you more borrowing power later.
