Despite frequent headlines warning about the potential bankruptcy of Social Security, the actual situation is more nuanced. While the program’s trust funds are under significant pressure, benefits are not disappearing overnight. New data shows a slow, ongoing challenge that could lead to benefit cuts unless Congress steps in.
What the Latest Numbers Show
According to the 2025 Social Security Trustees Report, the combined trust funds that support retirement and disability benefits are expected to be depleted by 2033. However, this does not mean benefits will stop entirely.
Even after the depletion of these funds, 79% of scheduled benefits are expected to continue being paid. This means that while payments would continue, they would be at a reduced level—roughly 20% less than what is currently planned.
Projected Shortfall: 2033
Current Payout Capacity After Depletion: 79% of scheduled benefits
Number of Americans Relying on Benefits: Around 67 million people
Without any intervention from Congress, retirees could see their monthly Social Security checks reduced by over 20% within the next decade.
Who Is Most at Risk?
While Social Security benefits are still being paid out as usual, the potential cuts will impact specific groups the hardest:
Retirees age 62 and younger (who will reach full retirement age after 2033)
Disabled Americans and surviving spouses
Low-income beneficiaries who rely almost entirely on Social Security for their income
Currently, nearly 40% of older Americans depend on Social Security for more than 90% of their income. For these individuals, a 20% reduction in benefits could push them into financial hardship, making it harder to afford basic living expenses.
Debunking the “Bankrupt” Myth
While it’s true that Social Security faces funding challenges, it is not going bankrupt. According to Shai Akabas, director of economic policy at the Bipartisan Policy Center, “Even if no action is taken, the program will still be able to pay a majority of benefits.”
Social Security is primarily funded through payroll taxes collected from current workers. As long as people continue to work and pay taxes, the program will continue to function—albeit at reduced levels once the trust funds are exhausted.
What Needs to Be Done to Fix Social Security?
To address Social Security’s financial shortfall, lawmakers need to make tough decisions, which may include:
Raising or eliminating the payroll tax cap (currently set at $168,600)
Gradually increasing the full retirement age
Adjusting the benefit formula to reduce payments for higher-income retirees
Introducing new taxes on investment income
So far, Congress has yet to reach a bipartisan agreement on how to tackle the issue, although many lawmakers predict that a solution will be pursued after the 2026 midterm elections.
Why It Matters Now
While Social Security’s insolvency is not imminent, the longer Congress waits to act, the harder it will be to resolve the issue. Delaying necessary reforms limits the options available and will likely result in more drastic, painful changes.
By acting sooner, lawmakers can implement gradual adjustments that would spread the burden across multiple generations, lessening the financial strain on workers and retirees alike.
