The Social Security Administration’s latest trustees report revealed a shocking prediction: by 2035, the national Social Security trust fund is set to run out.
If no action is taken to reverse this course, retirees will only receive 83% of their promised benefits.
Naturally, this is worrying news for the 70 million Americans relying on Social Security to make ends meet.
Although these projections give this system an extra year of breathing space compared to estimates published last year, it still renders the situation unsustainable.
Social Security Crisis: How Did We Get Here?
Social Security operates on a pay-as-you-go basis. Current workers pay into the system through a payroll tax—6.2% from employees, matched by employers. Self-employed individuals cover the full 12.4%. These taxes fund today’s retirees, not future payouts for the workers paying in.
In 2024, income up to $168,600 is taxed for Social Security. That cap will increase to $176,100 in 2025. Still, demographic changes which include a widening retired population and a decreasing ratio of workers to retirees are weakening the system’s long-term sustainability.
According to the trustees’ report released in May 2024, reserves will be exhausted by 2035. At that point, unless Congress intervenes, the program will rely solely on payroll tax income, which will only cover 83% of promised benefits.
What is at stake
Plenty of Americans, especially the elderly, rely solely on Social Security to pay their bills. About half of seniors receive at least 50% of their retirement income from the program.
Public polling also makes the importance of the program to so many Americans clear. A 2024 AARP survey found that 90% of US adults over 50 considered the program “very important.” But still, no political solution has been agreed upon.
What might be done
Lawmakers have several options at their disposal. Raising the payroll tax rate, lifting the income cap, pushing up the retirement age, or slimming down benefits. In 1983, a bipartisan effort extended the full retirement age and taxed some Social Security income.
Could a similar deal be struck again, before it is too late?
Or could the Trump administration’s new Department of Government Efficiency (DOGE) try to do away with the payments all together?
How can you prepare?
Future retirees have been warned against relying too heavily on Social Security to supplant their income, even if Congress manages to save the program. Financial advisors told CNBC that Americans ought to save some 10%–15% of their income for retirement.
Employer-sponsored 401(k)s, especially those with contribution matching, are a strong first step, although IRAs may offer more flexibility and tax advantages.
Still, that this looming funding gap could impact millions of Americans makes it a national issue. Will Congress step up to remedy it?
About the Author:
Georgia Gilholy is a journalist based in the United Kingdom who has been published in Newsweek, The Times of Israel, and the Spectator. Gilholy writes about international politics, culture, and education.
The Social Security Crisis
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