{"id":610388,"date":"2026-04-16T09:17:28","date_gmt":"2026-04-16T09:17:28","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/610388\/"},"modified":"2026-04-16T09:17:28","modified_gmt":"2026-04-16T09:17:28","slug":"social-security-has-a-25-trillion-deficit-heres-what-congress-is-doing-about-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/610388\/","title":{"rendered":"Social Security Has a $25 Trillion Deficit – Here’s What Congress Is Doing About It"},"content":{"rendered":"

Social Security is one of the most important senior benefits<\/a> today. And without it, millions of older Americans would most likely struggle to make ends meet.<\/p>\n

The problem is that Social Security is facing a massive funding shortfall. The program’s Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement benefits, is expected to run dry by 2032, according to a recent analysis by the Congressional Budget Office. Once those reserves are depleted, Social Security may only be able to pay 77% of scheduled benefits, according to the program’s Trustees, resulting in a 23% cut.<\/p>\n

Given the timing of Social Security’s insolvency date, lawmakers need to act quickly to prevent sweeping benefit cuts that could harm current and future retirees alike.<\/p>\n

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A massive funding gap<\/p>\n

The fact that Social Security is facing a major funding shortfall is not a surprise to lawmakers. The program’s Trustees have been sounding warnings about potential benefit cuts for years.<\/p>\n

But while those cuts could happen soon if lawmakers don’t act, Social Security’s financial woes are a long-term problem.<\/p>\n

As the Bipartisan Policy Center reported in 2025, Social Security is facing a $25 trillion deficit over the next 75 years. And the main reason boils down to a shrinking labor force.<\/p>\n

In 1960, there were more than five workers paying into Social Security per beneficiary. In 2024, that ratio dropped to three-to-one. And by the middle of the century, it’s projected to decrease to less than 2.5-to-one.<\/p>\n

The Bipartisan Policy Center notes that between 2024 and 2027, more than 4.1 million people are projected to turn 65, which will likely lead to a mass workforce exodus. The group calls that “the largest surge of retirements in our nation’s history.” But as older workers retire in droves and too few replacement workers enter the labor force to pay into Social Security, the program is going to feel the strain.<\/p>\n

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Could borrowing the money help?<\/p>\n

As consumers, we’re used to borrowing money to get out of a financial jam. Could Social Security do the same?<\/p>\n

Senator Bill Cassidy seems to think so. His idea to prevent benefit cuts is to issue $1.5 trillion of debt to fund investments in the stock market that Social Security can borrow from over the next 75 years to keep up with scheduled benefits. After that period, assets in the fund can be sold and transferred back to Social Security.<\/p>\n

But critics say that borrowing to fund Social Security is risky. Just as everyday investors take on risk when they put their money into the stock market, so too could market volatility compromise the stability of this approach.<\/p>\n

The Committee for a Responsible Federal Budget says stocks in the aforementioned investment fund would need to generate an annual return of 9% to 13% per year for the proposal to work. That’s possible, but by no means guaranteed.<\/p>\n

Will increasing program revenue work?<\/p>\n

While borrowing money is one option to address Social Security’s funding shortfall, so is raising taxes. Senator Sheldon Whitehouse’s Medicare & Social Security Fair Share Act seeks to change the program’s current wage cap of $184,500. The proposal is to impose Social Security taxes on incomes above $400,000 to increase revenue.<\/p>\n

The bill also seeks to raise the net investment tax, which supports Medicare, by 1.2%, bringing it to 5% for taxpayers with annual incomes over $400,000.<\/p>\n

Projections show these approaches could extend solvency for both Social Security and Medicare by 75 years.<\/p>\n

The problem, however, is what to do about Social Security’s current benefit cap, which is tied to the wage cap. If higher earners are forced to pay into the program at a higher rate but don’t get larger benefits in return, it changes the whole nature of Social Security.<\/p>\n

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Other possible solutions<\/p>\n

There are other potential solutions to address Social Security’s funding shortfall. One is to increase the program’s full retirement age (FRA), which is currently 67 for people born in 1960 or later.<\/p>\n

If FRA were to be increased, it would likely be phased in. The Congressional Budget Office suggests FRA might rise by two months per birth year for workers born between 1964 and 1981 until FRA is gradually capped at 70. Raising FRA would likely keep more people in the workforce longer, allowing Social Security to increase its revenue.<\/p>\n

Another option on the table is implementing means testing for Social Security. Seniors with incomes above a certain threshold would, under this system, potentially see their benefits reduced or taken away completely.<\/p>\n

Both of these proposals come with problems, though. Raising FRA could force people who do physical labor into early retirement, resulting in slashed benefits and financial struggles. Means testing Social Security recipients changes the entire nature of the program, shifting it from an entitlement program to something closer to resembling welfare.<\/p>\n

Bottom line<\/p>\n

Lawmakers currently have a daunting task ahead of them, given the projected OASI Trust Fund depletion date. For each year Congress waits to take action, the outcome potentially gets worse.<\/p>\n

For example, raising payroll taxes broadly is another way to stave off Social Security cuts. But if action is delayed until 2034, the required payroll tax increase rises from 3.65 percentage points today to 4.27 percentage points. A jump that significant could burden not just working Americans, but the companies that employ them.<\/p>\n

That doesn’t mean you have to actively stress about Social Security cuts. But it’s a good idea to keep your retirement plans<\/a> flexible in case they happen. And while it may be too late for current retirees to build savings, if you’re still working, take the opportunity to accumulate a large nest egg so you can supplement your Social Security benefits even more if they’re reduced.<\/p>\n

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