As of July, over 53 million Americans receive Social Security retirement benefits. A significant number of these recipients rely on the program for most, or in some cases, all of their retirement income, highlighting just how critical the program is for millions of people. Yet, the program’s sustainability is increasingly in question.
The Importance of Social Security Benefits
According to the Nationwide Retirement Institute 2025 Social Security Survey, over 60% of Social Security recipients feel vulnerable to financial hardship if there were cuts to Social Security benefits. This sentiment isn’t surprising, given how heavily people depend on the program.
However, the concerning part is that cuts to Social Security benefits may be closer than expected due to the current deficit the program faces.
How Social Security Funding Works
Social Security is funded through payroll taxes, which currently amount to 12.4%. This tax is split between employers and employees, with each paying 6.2%, while self-employed individuals pay the full 12.4%.
The money collected through these taxes is deposited into the Social Security Trust Fund, which consists of two main components:
Old-Age and Survivors Insurance (OASI) Trust Fund: Pays benefits to retirees, their families, and survivors of deceased recipients.
Disability Insurance (DI) Trust Fund: Pays benefits to disabled workers and their families.
In essence, the system operates on a pay-as-you-go basis: current workers fund the benefits of current retirees, with the expectation that future generations will do the same when it’s their turn to retire.
What’s the Likelihood of Benefits Being Cut?
The Social Security Administration’s 2025 Trustees Report revealed that Social Security cost $1.485 trillion in 2024, while only generating $1.418 trillion in revenue, creating a $67 billion deficit for the year. Both major Social Security trust funds have been running deficits for years.
The report also pointed out that the OASI trust fund could be exhausted by 2033, which would leave the SSA able to pay only 77% of the expected benefits. This situation could be particularly dire for the recipients who already feel vulnerable to cuts.
If the current deficit rate continues, the Social Security Trust Fund could be underfunded by more than $25 trillion by 2099. Without intervention, Social Security benefits would need to be cut by about 23% starting in 2034.
Why Are Social Security Funds Running Short?
The Social Security deficit isn’t caused by one factor, but by a combination of issues:
- Retirement of Baby Boomers: As more baby boomers retire, there are fewer workers paying into the system to support them.
- Longer Life Expectancy: People are living longer, which means they’re collecting benefits for a longer period, placing greater strain on the program.
- Rising Number of High Earners: More high earners mean a larger portion of income is exempt from payroll taxes. In 2025, the maximum taxable income is $176,100, with any earnings above this amount untaxed for Social Security.
- Low Interest Rates: Social Security reserves are invested in Treasury bonds to earn interest. With interest rates historically low for a long period, these investments earned less money, further contributing to the deficit.
Could Social Security Be Fixed?
While the current deficit situation is dire, it’s important to remember that Social Security has faced funding issues before. In the past, the government has been able to make adjustments to address these shortfalls.
Given the current political landscape, it’s difficult to predict how—or if—this issue will be resolved. However, considering how vital Social Security is to the financial stability of millions of Americans, it’s likely that addressing the program’s sustainability will become a priority for lawmakers on both sides of the aisle.
The $23,760 Social Security Bonus Most Retirees Overlook
For those concerned about their retirement savings, there are often overlooked strategies that can help boost Social Security benefits.
By maximizing benefits through the proper use of Social Security’s little-known “secrets,” retirees can see a significant increase in their monthly income, potentially adding up to $23,760 over the course of retirement.
