Social Security provides a critical source of income for millions of Americans, but after 90 years, the program faces significant financial challenges that could reshape it for future generations.
If Congress fails to act, retirees’ monthly checks could be reduced by 23 percent in less than a decade, slashing thousands of dollars from the average person’s annual benefits.
Lawmakers are unlikely to let that happen, but so far, they’ve chosen to postpone politically unpopular solutions, complicating eventual fixes.
On August 14, 1935, President Franklin D. Roosevelt (D) signed Social Security into law with the goal of providing “some measure of protection to the average citizen and his family against the loss of a job and poverty-ridden old age.”
Here’s what you should know about the program 90 years later:
When Social Security benefits could be cut
Social Security is not going away, but if Congress does not act, millions of Americans’ monthly retirement checks could be reduced in less than ten years.
The program’s retirement trust fund is expected to deplete by 2033, at which point Social Security will be able to pay only 77% of promised benefits.
For today’s average retired worker, that would equate to a $460 monthly cut, or more than $5,500 annually.
However, experts advise against claiming Social Security benefits early out of fear that the program will not be available in the future, as doing so results in permanently lower monthly checks.
Federal lawmakers are expected to act before the cuts take effect, but the main concern is that the longer they wait, the more difficult the solution will become.
Social Security is so widely supported that, until now, politicians have largely avoided actions that could alienate voters.
The last major overhaul occurred approximately 40 years ago, when the federal government gradually increased the full retirement age from 65 to 67. When that happened in 1983, Social Security’s insolvency was only months away.
Why Social Security is facing a financial shortfall
The program’s financial shortfall is largely due to the nation’s changing demographics, which have resulted in fewer workers supporting more retirees.
According to the Peter G. Peterson Foundation, there were 43 million people aged 65 and older in 2010, with that figure expected to rise to 59 million by 2024.
At the same time, the number of workers contributing to the program has decreased — from 2.9 covered workers per beneficiary in 2010 to 2.7 in 2024, with the ratio expected to fall even further to 2.3 by 2044, according to the foundation.
This imbalance is concerning because Social Security is primarily funded by a payroll tax, which accounts for approximately 90% of the trust fund’s income. Fewer employees imply less payroll tax revenue.
The good news is that the demographic shift isn’t unexpected, giving policymakers time to plan. The bad news is that it is difficult to reverse, and significant policy changes may be required to ensure the program’s long-term viability.
Another thing to consider is that, despite gradual increases in the income cap, a smaller proportion of wages are now subject to payroll tax than in the 1980s and 1990s. According to the Tax Foundation, the payroll tax now covers approximately 82 percent of wages and salaries, down from 90 percent in 1983.
Part of this is due to an increase in employer-provided benefits, such as health insurance, which is tax-deductible and thus exempt from income and payroll taxes, according to the Tax Foundation.
What can be done to fix Social Security?
Lawmakers have a few options: increase Social Security revenue, cut costs, or, most likely, do both.
Democrats want to increase revenue by making high earners pay Social Security taxes on income above the current cap. For 2025, the tax only applies to the first $176,100, so earnings above that amount are not taxed.
Another option for increasing revenue is to gradually raise the payroll tax rate. Currently, the Social Security tax rate is 12.4 percent total, split evenly between employees and employers at 6.2 percent each. The combined rate has remained stable since 1990.
While raising taxes is rarely popular, polls show that increasing revenue is generally more acceptable to the public than reducing benefits.
According to a Pew Research survey conducted in 2024, a large majority of Republicans (77%) and Democrats (83%) oppose Social Security benefit cuts.
President Trump has repeatedly promised not to cut Social Security benefits and has even suggested eliminating federal income taxes on retirement checks, despite the fact that such a move would exacerbate the program’s financial problems.
Trump, like his predecessors, has provided little concrete policy direction for fixing Social Security. Elon Musk’s efforts to root out widespread waste, fraud, and abuse failed to meet expectations and caused significant confusion.
Earlier this year, Brookings published a bipartisan plan to reform Social Security.
The proposal included tax-based revenue increases such as raising the maximum taxable ceiling and raising the payroll tax rate from 12.4% to 12.6%. It also proposed benefit reductions, such as raising the retirement age for high earners, among other changes.
