Social Security\u2019s retirement trust fund is projected to run out of money by 2033, with the disability trust fund running out a year later, according to the program\u2019s June 2025 trustees report (1).<\/p>\n
But the Committee for a Responsible Federal Budget estimates that the One Big Beautiful Bill Act \u2014 which reduces revenue collected from taxing Social Security benefits \u2014 will accelerate the program\u2019s insolvency to 2032 (2).<\/p>\n
Whatever may be the case, time is running out to make changes.<\/p>\n
\u201cThat compressed timescale means there\u2019s no easy fix,\u201d according to an op-ed by Bloomberg\u2019s editorial board (3). \u201cTweaks that phased in gently while protecting current beneficiaries could\u2019ve balanced the books by now if they\u2019d been done many years ago. Starting from here, they won\u2019t suffice to avoid the programs\u2019 imminent insolvency.\u201d<\/p>\n
Decades of delayed action have only exacerbated the shortfall. Bloomberg\u2019s editorial board argues that Washington must \u201cbreak its promise\u201d to Americans by making politically painful Social Security reforms, such as raising the retirement age.<\/p>\n
While the word \u201cinsolvency\u201d sounds catastrophic, Social Security won\u2019t disappear \u2014 but without urgent action, Americans could see their benefits shrink in less than a decade.<\/p>\n
As of April 2025, more than one-fifth of Americans \u2014 or 73.9 million people \u2014 benefit from Social Security, including 52.6 million retired workers and 7.2 million disabled workers. These benefits are funded through a 12.4% payroll tax, which is split between the employer and employee (4).<\/p>\n
Many older Americans rely on Social Security in retirement; in some cases, it may be their sole source of income. In a Gallup report, 58% of retired Americans said Social Security is a \u201cmajor source\u201d of their retirement income (5).<\/p>\n
For those who have yet to retire, Allianz\u2019s 2025 Annual Retirement Study found that 62% of Americans aren\u2019t saving as much for retirement as they\u2019d like, while 64% worry more about running out of money than death. Inflation is a major cause of that worry, but 43% also worry that Social Security won\u2019t provide as much financial support as they\u2019ll need (6).<\/p>\n
So, how dire is the state of Social Security? Insolvency doesn\u2019t mean your benefits will disappear altogether, it simply means the program\u2019s trust funds have been depleted. But since the program is paid for with ongoing tax income, Social Security will still exist \u2014 there just won\u2019t be enough tax dollars coming in to cover the current benefits going out.<\/p>\n
In other words, older Americans would receive a reduced benefit. The trustees report estimates that, unless something changes, retirees will receive 77% of their full benefit when the retirement trust fund is depleted (1). Those collecting disability benefits will receive 81% of their full benefit.<\/p>\n
There are a number of reforms that could help fill those coffers, but the clock is ticking. Many of these reforms are unpopular, such as raising the retirement age, raising payroll taxes, raising the payroll tax cap and using price indexing instead of wage indexing to calculate benefits.<\/p>\n
But certain reforms \u2014 such as raising the full retirement age (FRA) or altering benefit formulas \u2014 would have financial consequences for younger workers and future retirees.<\/p>\n
For example, one of the simplest reforms would be to increase payroll tax by about three to four percentage points from the current rate of 12.4%, which would \u201cgo far toward eliminating the long-term shortfall,\u201d according to Bloomberg\u2019s editorial board (3). However, Americans in the lowest income bracket would be hit hardest, reducing their take-home pay at a time when many already feel squeezed.<\/p>\n
Another one of these potential reforms would be raising the FRA from 67 to 69, which the Bloomberg editors say would \u201cclose about a third of the shortfall over 75 years.\u201d Americans would work longer before retiring, pay more taxes during that time (boosting program revenue) and claim their benefit later (receiving monthly checks for fewer years).<\/p>\n
Once again, this could hit lower-income workers hardest, since they tend to have shorter lifespans than wealthy Americans (7). It could also impact workers in physically demanding jobs who may not be able to keep working, yet don\u2019t qualify for disability.<\/p>\n
Other alternatives include increasing the maximum amount of earnings subject to the tax \u2014 for 2026, it\u2019s capped at $184,500 (8) \u2014 and doing a means-testing for higher earners. Blending \u201cmilder variants\u201d of all of these reforms \u201cwould make each change less disruptive and, with luck, more feasible,\u201d according to the Bloomberg editors.<\/p>\n
Read More: The average net worth of Americans is a surprising $620,654. But it almost means nothing. Here\u2019s the number that counts (and how to make it skyrocket)<\/a><\/p>\n These potential reforms could have an impact on both your paycheck or future retirement plans. But, without reform, you could see a reduction in your future Social Security retirement benefit. To date, no legislation has been enacted to address the funding shortfall.<\/p>\n No matter what happens, it\u2019s a good time to take charge of your retirement savings and plan for a range of outcomes, including a smaller Social Security check. For example, the average Social Security check is about $2,002.39 (9), which means a 77% cut would leave you with a $1,542 check.<\/p>\n From the get-go, Social Security was designed to supplement \u2014 not replace \u2014 individual retirement savings, and it was conceived at a time when American life expectancies were much shorter.<\/p>\n \u201cSocial Security was never meant to fund 30 years of retirement, so it makes sense that the full retirement age increases with time,\u201d Eric Ludwig, program director for the Retirement Income Certified Professional Program at the American College of Financial Services, told Kiplinger (10).<\/p>\n But Ludwig also notes that this would unfairly impact Americans working in physically taxing jobs. If they\u2019re physically unable to keep working an extra two years, it could mean adjusting their retirement plans or finding another way to fund the shortfall.<\/p>\n So, amid all this Social Security uncertainty, you may want to focus on your own savings instead: maximizing tax-advantaged accounts such as 401(k)s<\/a> and IRAs<\/a>, using catch-up contributions if you\u2019re over 50, and building a diverse investment portfolio.<\/p>\n It also means saving consistently \u2014 and as early as possible, so you can benefit from the power of compounding. You may want to consult with a financial advisor to model various scenarios.<\/p>\n While workers who\u2019ve paid into the program can hope for the best, it also pays off to prepare for a variety of outcomes, increase personal savings where possible and be realistic about how tomorrow\u2019s benefits may differ from today\u2019s promises.<\/p>\n Article sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Social Security Administration (1<\/a>, 8<\/a>); Committee for a Responsible Federal Budget (2<\/a>); Bloomberg (3<\/a>); Pew Research Center (4<\/a>); Gallup (5<\/a>); Allianz (6<\/a>); U.S. Senate Committee on Health, Education, Labor & Pensions (7<\/a>); Experian (9<\/a>); Kiplinger (10<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Social Security\u2019s retirement trust fund is projected to run out of money by 2033, with the disability trust…\n","protected":false},"author":2,"featured_media":403517,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[4536,45,49,48,133,170099,131,132,8496,2438],"class_list":{"0":"post-403516","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-bloomberg","9":"tag-business","10":"tag-ca","11":"tag-canada","12":"tag-finance","13":"tag-payroll-tax","14":"tag-personal-finance","15":"tag-personalfinance","16":"tag-retirement-income","17":"tag-social-security"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/403516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=403516"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/403516\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/403517"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=403516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=403516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=403516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}