The Red Devils finished in seventh place in the Premier League last season, while the hangover from their disastrous year continued into this campaign with a 2-1 opening-day defeat against Swansea City.
United completed the signing of defender Marcos Rojo from Sporting Lisbon yesterday, but Scholes, who spent more than two decades at Old Trafford, says that more needs to be done before the window closes.
"I am scared for United. Genuinely scared they could go into the wilderness in the same way Liverpool did in the 1990s," the 39-year-old told The Independent.
"What do they need? Five players. Five proper players who can hit the ground running and turn round a situation that looks desperate.
"Let me be clear: I am sick of having to criticise the club which I gave my life to as a footballer. But United need to arrest their decline."
United return to action this weekend with a trip to face Sunderland.