You probably know by now that retirement isn’t all about carefree fun. Living off a fixed income can be tough, especially if you weren’t able to save as much as you wanted to when you were younger. So every dollar you have, including your Social Security checks, matters.
Unfortunately, the latest Social Security Trustees Report has raised concerns about the program’s solvency. This is a serious issue for seniors who rely heavily on their Social Security benefits to carry them through the next few decades. But that doesn’t mean you’ll soon be covering your expenses all on your own either.
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What’s really happening with Social Security
Social Security has been spending more money than it’s taken in every year since 2021, and that problem continues to worsen. Baby boomers retiring en masse and fewer workers in younger generations to replace them has meant that Social Security tax revenue isn’t enough to pay out everyone’s benefits.
So far, the program has stayed afloat by making up the difference with money in the program’s trust funds. But this won’t work forever. Eventually, those trust funds will run out, and Social Security could face a shortfall when it does.
When Social Security will run out of money has always been a bit of a moving target. Last year, the Trustees Report predicted depletion in 2035. But this year’s report now estimates that the trust funds will be depleted a year earlier. This may be due to the passage of the Social Security Fairness Act earlier this year, which increased benefits for certain retirees, and which was projected to accelerate trust fund depletion by six months.
This wouldn’t be the end of Social Security, though. It would continue to receive revenue from workers paying Social Security payroll taxes and seniors who owe income taxes on a portion of their benefits. Together, this would be enough to cover the majority of Social Security benefits payable today.
The 2024 Trustees Report estimated that after trust fund depletion, the program could pay out about 83% of scheduled benefits. The 2025 report puts this a little lower — around 81%. In either case, you’d definitely continue to get something from the program in 2035 and beyond.
That said, a nearly 20% benefit cut is a serious concern, particularly for those who have little to no personal savings. But it probably won’t happen.
Changes are likely coming to Social Security
Though the deadline has moved up a little, the government has been aware of Social Security’s looming insolvency for years, and this isn’t the first time this has happened either. Last time, Congress made changes, like adding Social Security benefit taxes, to bring in more money so it wouldn’t have to slash benefits.
It’s likely this happens again, though we don’t know when Washington will make the changes or what they’ll look like. Benefit cuts remain a possibility, but it’s unlikely they would be 20%. And they may not happen at all.
The government might decide to increase the Social Security payroll tax rate that workers pay or increase the ceiling on income subject to Social Security tax (currently $176,100 in 2025). This would force wealthier Americans to pay more into the program.
For now, all we can do is wait to see what happens. But once there’s a plan in place, it’ll be time to revisit your budget and figure out how you’ll cover your expenses moving forward.
