6 things financial advisors say you must do before 2032 to protect your retirement

When building a retirement plan, it's a good idea to start with the factors you can control. But what about things that are out of your control? For example, what would you do if your Social Security income suddenly dropped?

Unfortunately, falling Social Security income might be a very real possibility. According to the 2026 Social Security Trustees Report, an automatic Social Security benefit reduction of up to 22% could happen in 2032 without congressional action.

Most retirees and future retirees don't have a plan for what might happen if their Social Security income is slashed by over 20%. Let's explore what some financial advisors say you should do to protect your retirement income.

1. Run your numbers again

Since it's possible that Social Security income will drop by 22% in 2032, it's a good time to stress-test your plan with this potential cut.

"Run your numbers, assuming Social Security pays roughly 78% of what's promised starting in 2033, the worst case if lawmakers sit on their hands," says Andrew Latham, CFP and author of Be Your Own Financial Planner.

Latham continues, "If your plan still holds together, you get to relax. If a $2,000 check dropping to about $1,560 would sink you, far better to learn that now, with six-plus years to adjust, than to discover it the hard way at 70."

2. Build a cash cushion

When navigating retirement, it's helpful to have a cash cushion under most circumstances. But it's especially important if a potential income drop is on the horizon.

"The real danger usually isn't the cut itself; it's reacting badly to it, like selling investments in a down market to plug the gap," says Latham. "Park one to two years of spending in cash or short-term bonds."

If your benefit does drop, having the cash on hand to cover your expenses for a while can give you some time to figure out your next moves without panic selling your portfolio.

3. Diversify your income

"The cleanest hedge is simply not having all your retirement eggs in the Social Security basket," says Latham, "A mix of Roth, taxable savings, maybe a pension or an income annuity for a guaranteed floor turns a benefit cut into an annoyance instead of an emergency."

If possible, work on building out multiple streams of income for your golden years.

4. Delay claiming your benefits, if possible

When considering your retirement income, you may have the option to claim your Social Security benefits as early as age 62. But claiming early will lead to a lower monthly benefit check. With potential cuts on the horizon, holding out for a higher Social Security monthly benefit may be especially worthwhile.

"Delay claiming if you can afford to," says Jeff Judge, CFP and managing partner at Chesapeake Financial Planners, "If full benefits get cut to 78 cents on the dollar at depletion, a larger base still yields more than a smaller one."

5. Consider Roth IRA conversions

"If SS benefits are reduced, this will mean lower reportable income, which could be very helpful for converting IRA funds to a Roth, and having a tax-free bucket of assets to pull income from in retirement could be a very helpful backup if SS benefits get reduced," says John Foard, CFP and co-founder of Crown Advisors, LLC.

When jumping into this somewhat complex tax strategy, it might be helpful to work with a CPA or financial advisor.

6. Don't panic

When you see the possibility of your Social Security income dropping, it's easy to panic. But fear can lead to poor financial decisions.

"It's worth remembering, this is a projection, not a done deal," says Latham, "Congress patched a nearly identical shortfall in 1983. Plan for the rough scenario, just don't torch a perfectly good strategy over a date on a chart."

If possible, hold off on panicking until this potential outcome becomes a reality. In the meantime, it's a good idea to continue building a solid retirement nest egg to carry you through the uncertain times ahead.

Bottom line

If you're concerned about Social Security income falling in 2032, the best thing to do is to create a plan for the future. Depending on your situation, this might look like cutting back on spending, tapping into senior benefits, building a larger nest egg, or even continuing to work in some capacity past your intended retirement age.

Of course, everyone's situation is unique. If you aren't sure what steps are best for your situation, consider speaking to a financial advisor.