Key Points
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Social Security’s trust funds will be depleted by 2034, according to recent estimates.
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The program will still be able to operate on tax revenue, but cuts are possible.
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The government will likely reform the program, but that could come with higher taxes.
Whether you’re sitting pretty on a $2 million nest egg or you barely have two pennies to rub together, you probably hope to get some money from Social Security in retirement. After all, you’ve paid a substantial amount into the program throughout your career. It’s only fair to get some of that back.
Estimating how much you’ll get from Social Security has always been a bit of a guessing game, because you don’t know how your income will change over time or how long you’ll claim benefits. But it’s even more complicated for us today because the program is operating on borrowed time. Understanding where it’s headed is key if you hope to maintain your financial security in the coming decades.
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Social Security is in trouble, but it’s not going away
When most people hear that Social Security is running out of money, they naturally panic and assume it means their checks are going to stop coming. Fortunately, that’s not the case.
Social Security has three sources of revenue. The first is the Social Security payroll taxes that workers pay. Currently, that’s 12.4% of your income, split evenly between employee and employer. Then, there’s the interest earned on money in Social Security’s trust funds. Finally, there are the Social Security benefit taxes that many seniors pay on up to 85% of their checks — yes, even after the “One Big, Beautiful Bill”‘s passing.
When people say Social Security is in trouble, they mean the trust fund reserves are almost depleted. The latest Trustees Report estimates that this will happen around 2034. After that, the program won’t be able to rely upon any trust fund interest to cover its costs.
But Social Security payroll and benefit taxes aren’t going anywhere. Together, they’d still be able to pay out about 77% of scheduled benefits during the 75-year period ending in 2099. That’s the good news.
The bad news is that a 23% benefit cut would still be deeply problematic for many workers and seniors who depend upon their checks to make ends meet. That would drop the $2,005 average monthly benefit as of June 2025 to just $1,544 per month. That’s a loss of more than $5,500 over the course of a year.
What workers and retirees can do
Social Security losing nearly one-quarter of its buying power is an alarming thought, but it’s not likely to happen. The program has faced insolvency in the past, and the government has stepped in to avoid this. It’ll likely do this again in the coming years, though we don’t yet know when this will happen or what the final fix will look like.
Washington can take three main approaches: increasing revenue, decreasing benefits, or a combination of both. We’ve already touched upon an across-the-board benefit cut, but the government could also institute a gradual benefit cut by raising the program’s full retirement age (FRA), which currently sits at 67. This was part of how the government resolved Social Security’s last funding crisis in the 1980s, though it’s not a popular strategy because it means younger workers will receive less from the program than retirees do today.
Increasing revenue for the program could involve raising the Social Security payroll tax rate. This wouldn’t affect retirees, but it could put workers in a bind by making it more difficult for them to save for retirement.
The most popular strategy for increasing revenue among ordinary Americans is to increase the ceiling on income subject to Social Security payroll taxes — just $176,100 in 2025. This would force wealthier Americans to pay more into the program without affecting average earners. However, it wouldn’t be enough on its own to solve the funding shortfall.
It’s likely that whatever Washington decides will involve a combination of strategies. But since we can’t be sure who will foot the bill, we still have to take the risk of benefit cuts and/or higher taxes seriously. That’s why it’s critical to save as much as you can for retirement on your own now, so you’re better able to weather whatever comes next.
You can also reach out to your Congressional representatives to make your feelings about the issue known. Expect Social Security’s funding crisis to get greater attention over the next few years. When the government finally comes up with a strategy, it’ll be time to revisit your retirement plan and decide if you need to make any changes.
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