The latest 2025 Social Security Trustees Report brings unsettling news and unless Congress steps in, Social Security retirement benefits could face a 23% cut starting in 2033. That might sound far away, but it’s just eight years down the road, well within the lifetime of most current and future retirees.
If you rely on Social Security now or plan to in the near future, it’s essential to understand what’s going on and what steps you can take to prepare.
The Financial State of Social Security
According to the report, the Old Age and Survivors Insurance (OASI) Trust Fund, which pays out retirement and survivor benefits, is on track to be fully depleted by 2033. After that, the only money available will be from ongoing payroll taxes (FICA) collected from workers. These taxes would only be able to cover about 77% of scheduled benefits, resulting in a 23% cut across the board.
If Congress decided to combine the OASI and Disability Insurance (DI) Trust Funds, which would require a change in the law, the merged fund would only stretch things out by about a year. By 2034, it would still run short, leaving enough money to cover just 81% of the benefits owed.
No, Social Security Won’t Vanish
It’s important to clear up a common misconception: Social Security is not going bankrupt. Even if the trust funds run out, workers will still be paying FICA taxes, and that money will still go toward benefits. So, while cuts could be painful, benefits won’t disappear entirely.
How Can Congress Fix the Problem?
There are three options lawmakers have to secure Social Security’s finances:
- Reduce benefits—for future retirees, current retirees, or both.
- Raise payroll taxes—either by increasing rates or removing the income cap.
- Find new sources of revenue—such as general government funds or new taxes.
The funding shortfall is estimated at 3.8% of all taxable worker wages, or about 1.3% of national GDP. While this might seem manageable on paper, political gridlock has prevented progress. Democrats typically favour higher taxes to preserve benefits, while Republicans often support benefit cuts to avoid raising taxes.
What Should Retirees and Pre-Retirees Do Now?
If you’re concerned about Congress failing to act in time, it’s wise to start planning for reduced benefits:
- Take a fresh look at your budget: Maybe it’s time to think about moving to a smaller place or holding off on big-ticket buys.
- Find ways to bring in a little extra: Picking up a part-time job or side gig could help you build a cushion before any potential cuts hit.
- Delay claiming Social Security: Though some may rush to claim benefits early, delaying until age 70 still offers increased lifetime benefits in most scenarios. You can use free tools like Open Social Security to help you plan based on your unique situation.
Why Early Action Matters
The Trustees themselves urge Congress to act quickly. Their summary states:
“Delaying changes only makes them more difficult. Acting sooner allows adjustments to be phased in gradually, giving Americans time to plan and adapt.”
In other words, fixing Social Security today would be far easier than waiting until the trust fund is nearly empty.
Don’t Wait—Speak Up
Social Security is a significant source of financial security for millions of Americans. If we want it to remain strong for future generations, pressure on lawmakers is essential. Consider:
- Writing or calling your Senators and Representatives
- Joining advocacy groups like the National Committee to Preserve Social Security and Medicare
- Staying informed so you can respond quickly if legislation is proposed
Final Thoughts
The 2025 Trustees Report isn’t just about numbers, it’s a warning. Whether you’ve already retired or are still a few years out, now’s the time to take Social Security seriously and think about how it fits into your plans. If enough of us speak up and get prepared, there’s still a chance to steer things in the right direction and keep the program strong.