Approximately 70 million Americans — including retirees, disabled individuals, and survivors — rely on the Social Security benefit checks that are paid to them on a monthly basis by the Social Security Administration (SSA). However, according to the annual report from the trustees of Social Security, the program’s trust fund could run dry within the next decade and as a result, the agency will no longer be able to pay retirees their full benefit amount.
There are several factors contributing towards this rapid depletion of the Social Security trust fund, one of which is a law that has recently been passed that increased the benefits for public sector employees who previously had their benefits reduced.
If no reforms are made to the program now, the foreseeable future may include cuts to benefits for retirees and other beneficiaries. Here is what you need to know.
Social Security trust fund close to exhaustion
Benefits are paid from two main pools of funding, one of which is the Old-Age and Survivors Insurance (OASI) Trust Fund which provides benefits to retirees, survivors, and spouses. The other is the Disability Insurance (DI) Trust Fund which covers benefits for disabled individuals, including the Supplemental Security Income.
However, according to the trustees’ report, the OASI trust fund will only be able to pay 100% of benefits until 2033.
“The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year’s report. At that time, the fund’s reserves will become depleted and continuing program income will be sufficient to pay 77 percent of total scheduled benefits,” as per the report.
The Social Security Fairness Act appears to be a point of contention when discussing the matter of the Social Security Trust Fund and its future. The Fairness Act effectively repealed two previous provisions that impacted public sector workers by having their benefits reduced due to alternate pensions provided by their employers. By restoring full benefits to the some 3 million impacted people, experts have warned that this would “hurt the program’s finances.
“It was a political giveaway masquerading as reform,” said Romina Boccia, director of budget and entitlement policy at the libertarian Cato Institute, in a statement.
“Instead of tackling Social Security’s structural imbalances, Congress chose to increase benefits for a vocal minority — accelerating trust fund insolvency by 6 months in the process,” Boccia added. “It’s a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle.”
Whilst the report projects that the OASI trust fund will only be able to pay 100% of scheduled benefits up until 2033, the DI trust fund is projected to continue to pay benefits at a 100% rate up until 2099. However, the vast majority of beneficiaries are paid from the OASI trust fund because “just over 60.1 million people received Social Security retirement and survivors benefits at the end of 2024, while 8.3 million Americans received disability benefits,” according to the trustees.
In a message to the public, the trustees wrote, “Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”
Experts are of the opinion that no change will be spurred by Congress anytime soon since passing the “Big Bill” of Donald Trump is currently a point of focus. As such, whilst President Trump has promised that neither Social Security, nor Medicare will be cut under his Big Bill, there have been no proposals regarding a solution to the trust fund crisis.
In a statement, Nancy Altman, president of Social Security Works, an advocacy group, said, “Any politician who doesn’t support increasing Social Security’s revenue is, by default, supporting benefit cuts.”
“As the date gets closer and closer, Congress really needs to start getting more focused,” claimed Bill Sweeney, senior vice president for government affairs at AARP. “The American public expects them to get focused on this, to protect the money that they’ve earned.”