Social Security has been a cornerstone of retirement planning for millions of Americans, but in 2025, there are some critical issues that retirees need to understand about the program’s future.
While the idea that Social Security is running out of money is a bit of an exaggeration, the reality is that the program is facing significant challenges. Here’s what you need to know.
Why Is Social Security Facing Financial Trouble?
Over the years, Social Security has been running a surplus, meaning there has been more money coming in through taxes on workers’ wages than going out to beneficiaries. However, with people living longer and retiring earlier, that surplus is being drained. The number of workers per retiree has been steadily declining:
In 1955, there were 8.6 workers for every beneficiary.
In 1985, that ratio fell to 3.3 workers per retiree.
In 2023, it dropped further to 2.7 workers per beneficiary.
Projections suggest that by 2036, it will be just 2.3 workers per retiree.
This shrinking worker-to-beneficiary ratio, combined with the aging population, is contributing to Social Security’s growing deficit. According to estimates, by 2034, Social Security will only be able to pay 81% of the benefits owed to retirees based on the taxes it receives from workers.
What Will Happen If Social Security Runs Out of Money?
The reality is, Social Security isn’t going bankrupt, but it is running out of funds faster than it can replenish them. This isn’t a disaster scenario in which retirees will receive nothing, but without changes to the system, it could mean a reduction in benefits for future retirees.
In fact, actions taken by previous administrations, such as the “Big, Beautiful Bill” under the Trump administration, have accelerated the depletion of Social Security’s surplus. The bottom line is that beneficiaries will receive less unless significant adjustments are made to the system.
How Can Social Security Be Fixed?
Fortunately, there are a few ways to address Social Security’s funding shortfall:
- Increase Social Security Taxes: One way to boost the program’s funds is by raising the payroll tax on earnings. Even a small increase in the percentage could significantly improve the program’s financial health.
- Raise or Eliminate the Earnings Cap: Currently, only earnings up to $176,100 are taxed for Social Security. Raising or even eliminating the cap would ensure that high-income earners contribute more to the system.
- Adjust the Full Retirement Age: Another solution could be to gradually raise the age at which people can claim full benefits, which would reduce the number of years Social Security needs to pay benefits.
- Cut Spending: The government could also consider reducing benefits, though this would be a politically difficult option and could hurt future retirees.
What Can You Do as a Retiree?
As you plan for retirement, it’s important not to rely solely on Social Security for your income. Although Social Security will likely still be there, the amount you receive may be reduced, and you may need additional sources of income.
The $23,760 Social Security Bonus Most Retirees Overlook
One of the biggest missed opportunities for retirees is the $23,760 Social Security bonus. This little-known benefit could provide a significant boost to your retirement income.
Here’s how it works: delaying your Social Security benefits beyond your full retirement age can increase your monthly payment by a substantial amount.
In fact, for every year you delay receiving benefits beyond your full retirement age, you can earn an additional 8% per year in benefits. This can add up to a significant sum over your retirement.
Many people don’t realize this option and start claiming their benefits early, missing out on the potential bonus. If you’re able to work for a few more years or have other sources of income, it could be worth delaying your Social Security payments to get the maximum benefit.
What Does This Mean for You?
With Social Security’s future uncertain, it’s important to start planning for retirement now. Here are a few tips:
Save and invest wisely to build multiple income streams.
Consider delaying your Social Security benefits to maximize your monthly payments.
Advocate for Social Security reform by letting your elected officials know you want to see the program strengthened.
While Social Security may not be in immediate danger of running out of money, the program does face significant financial challenges in the coming decades. As we plan for our retirements, we shouldn’t rely entirely on Social Security, but it will still play a critical role in supporting us.
Take the time now to save and plan effectively, and don’t miss out on the $23,760 Social Security bonus by claiming benefits too early.
