Reduce benefits by X% starting in year Y models a legislated shortfall. From the first day of that calendar year, every benefit you entered, including yours, your spouse's, and the survivor's, is paid at the remaining share for the rest of the plan. It is off unless you turn it on, and it changes nothing else: your spending stays exactly where you set it, so the portfolio has to cover the difference. That is the whole point of the test.
Why the default is 20% from 2034
Social Security's retirement trust fund holds a reserve that has been paying out more than payroll taxes bring in. The Trustees' annual reports project the reserve running down in the early 2030s. The 2026 report says late 2032 for the retirement fund on its own, with 78% of scheduled benefits still payable from incoming payroll tax; fold in the disability fund (which itself takes an act of Congress) and it reads 2034 with 83% payable. The preset rounds that band to one number: the arithmetic of doing nothing, not a forecast of what will happen.
It very likely is not what happens. Congress has a menu of fixes, and most of them fall somewhere other than a flat cut to everyone:
- raising or removing the wage cap on the payroll tax
- a higher payroll tax rate
- a later full retirement age (a benefit cut in a different costume)
- reduced benefits only above some income, or a slower cost-of-living formula
- general-revenue transfers
Every one of those splits the gap differently across households. Treat the knob as "what if my share of the fix is X%", and try more than one X.
What it does to the plan
- Benefits fall; spending does not. The portfolio sells more each year to fill the hole, which is the mechanism that moves your success rate.
- The reduction is in today's dollars, the same real terms everything else on this page uses. A 20% cut means 20% less purchasing power, permanently, not a one-year dip.
- Taxes fall slightly along with it: less benefit means less taxable Social Security through the provisional-income worksheet, and a lower MAGI for ACA subsidies before 65. The net damage is a little smaller than the gross cut, which is why the success rate moves less than you might guess from the dollars alone.
- With survivorship on, the survivor's benefit, the larger of the two, takes the same percentage cut.
- It is a step, not a phase-in: the year before is paid in full, the year itself and every year after are reduced.
How to read the result
Save your plan, note the success rate, turn the cut on, and compare. For a plan that leans on Social Security this is usually the largest single assumption you can move. It is bigger than a point of return or moving retirement by a year because it hits every remaining year at once and it hits the years when the portfolio is smallest.
If a 20% cut breaks the plan, the fix is not a better guess about legislation. It is the levers you actually control: spending flexibility, a later claim, working longer, or a larger buffer. Run those against the stressed plan, not the baseline.