Planning to Retire in 2035? Read This Before You Collect Your First Social Security Check.

The majority of Americans rely on Social Security to some extent in retirement. In fact, 58% of current retirees say they depend on their benefits “exclusively” or “heavily,” according to The Motley Fool’s recent Social Security Cost-of-Living Adjustment Survey.

But the Social Security program faces major hurdles that could be exacerbated in the next decade. If you’re planning on retiring in 2035, there are two important factors to consider.

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1. Benefit cuts could be coming

The vast majority of Social Security’s income comes from taxes. Workers pay into the system through payroll taxes, which fund current retirees’ monthly checks.

However, Social Security has been running at a deficit for years. This is partly due to baby boomers retiring in droves and partly to other factors, such as a declining birth rate and slowing immigration. In a nutshell, Social Security is paying out more in benefits than it’s receiving in income.

So far, the Social Security Administration (SSA) has covered the gap by drawing on its two trust funds: the Old-Age and Survivors Insurance (OASI) fund and the Disability Insurance (DI) fund. Once those funds run out, however, benefit cuts could be on the table.

According to the latest estimates from the SSA Board of Trustees, both the OASI and DI funds will be depleted by 2034. When that happens, Social Security’s income sources will only be enough to cover around 81% of scheduled benefits.

In other words, if lawmakers can’t find a solution to Social Security’s cash shortfall before 2034, benefits could be slashed by close to 20%.

2. Social Security is losing buying power

The other issue plaguing Social Security is its struggle to keep up with rising costs.

While inflation has soared in recent years, this isn’t necessarily a new problem for Social Security. Between 2010 and 2024, benefits lost around 20% of their buying power, according to research from nonpartisan advocacy group The Senior Citizens League. In that period, there were only five years in which the cost-of-living-adjustment (COLA) outpaced the inflation rate for that year.

It’s becoming increasingly difficult for retirees to depend on their benefits, as Social Security doesn’t go as far as it used to. If you’re expecting your monthly payments to make up a significant chunk of your retirement income, it may be wise to develop a backup plan.

What can you do to prepare?

Perhaps the best solution is to strengthen your savings as much as possible so you can rely less on Social Security. If you’re contributing to a 401(k) that offers matching contributions, aim to save enough to earn the full match. The company match is essentially free money that can help you earn thousands more between now and retirement.

You could also consider delaying claiming benefits. You don’t necessarily need to retire and file for Social Security at the same time, though the two often go hand-in-hand. Waiting a few years to file can boost your benefits by hundreds of dollars per month, which can go a long way if Social Security faces cuts or continues to lose buying power.

Social Security may be facing challenges, but the more you can prepare for them, the better you can protect your financial future.