In February, more than 52 million retired-worker beneficiaries collected an average Social Security check of $1,980.86. This might not sound like much, but Social Security income has proved to be indispensable for a majority of retirees.

In each of the last 23 years, national pollster Gallup has conducted a survey to gauge how reliant retirees are on the income they receive from America’s leading social program. What these surveys have shown is that 80% to 90% of retired workers need their monthly check, in some capacity, to cover their expenses.

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However, playing a key role in laying a financial foundation for America’s aging workforce doesn’t mean Social Security’s own foundation is on solid footing. For the last four decades, the program’s long-term financial outlook has been worsening. Though there are numerous factors worth blaming, what’s arguably the most commonly pointed to scapegoat is Congress.

Image source: Getty Images.

Social Security benefit cuts may be necessary by 2033

For 85 years, the Social Security Board of Trustees has published an annual report that details the financial health of the program. Anyone can review these reports, which categorize how every dollar in income is collected, as well as where those dollars are spent/end up.

But what tends to garner more attention with the annual Trustees Reports is their forward-looking estimates. The Trustees take into account a number of dynamic variables, such as fiscal and monetary policy, along with a laundry list of demographic factors, to predict how financially sound Social Security will be over the long term (defined as the 75 years following the release of a report).

Since 1985, every Social Security Trustees Report has warned of a long-term funding obligation shortfall. In simpler terms, projected income to be collected over the next 75 years won’t be enough to cover outlays, which includes benefits, inclusive of cost-of-living adjustments (COLAs), and to a far lesser extent administrative expenses to oversee the program. This long-term funding deficit reached an estimated $23.2 trillion in 2024.

To make matters worse, the Trustees are forecasting an exhaustion of the asset reserves for the Old-Age and Survivors Insurance Trust Fund (OASI) by 2033. The OASI is the fund that pays monthly benefits to retired workers and survivor beneficiaries.

If this excess cash that’s been built up since inception is completely depleted by 2033, retired workers and survivor beneficiaries can see their monthly checks slashed by up to 21%!

The OASI’s asset reserves are forecast to be gone by 2033. US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.

Is congressional theft to blame for Social Security’s souring financial outlook?

With a better understanding of the more immediate and long-term challenges that await Social Security, let’s return to the question at hand: Is Congressional theft to blame?

If you were to peruse social media message boards, there’s a very high probability you’ll find posts that blame lawmakers for stealing funds from Social Security. In many instances, these posts claim that America’s leading retirement program would be fine if the stolen money was returned, with interest.

While this is a somewhat popular online opinion, it’s a perfect example of a popular opinion being completely wrong.

The likely reason some people falsely believe Congress is misappropriating Social Security’s funds is because they don’t fully understand what happens to the program’s asset reserves.

Social Security’s asset reserves represent the excess income collected since inception that wasn’t paid out as benefits or used to cover administrative expenses. At the end of 2020, the combined asset reserves for OASI and Disability Insurance Trust Fund (DI) peaked at $2.908 trillion.

However, Social Security’s asset reserves aren’t just sitting in a vault collecting dust. Based on the Social Security Act, which was signed into law 90 years ago this upcoming August, the program’s asset reserves are required by law (I repeat, required by law) to be invested in special-issue, interest-bearing, government bonds.

The investment holdings of the OASI and DI are public information that’s updated on a monthly basis. For example, as of the end of March, the OASI and DI had a combined $2.678 trillion invested in various bonds and certificates of indebtedness, with an average interest rate of 2.535%. This average interest rate is going to fluctuate based on the Fed’s monetary policy, along with the various maturities of the program’s special-issue bonds.

Though this example has been used previously, Social Security investing its asset reserves in special-issue government bonds is no different than John or Jane Q. Public purchasing a certificate of deposit (CD) at their local bank or credit union.

If you purchase a CD at a bank or credit union, they’re not going to put your cash into a lock box. The bank is going to use your capital to generate a higher interest loan that’ll net it a profit. Just because the cash you gave the bank to purchase the CD isn’t sitting in their vault doesn’t mean they’ve stolen your money. When the CD matures, you’re paid in full.

It’s the same story with the Social Security’s asset reserves. The government can use this capital for a variety of funding sources, including defense spending, healthcare, and so on. Regardless of where the federal government spends its money, every interest payment and maturity of these special-issue bonds has been met, without fail, since Social Security’s inception.

Long story short, every cent in Social Security’s investment holdings matches up with the program’s asset reserves since inception — and interest is being paid on what’s borrowed. If this funding source were disallowed, Social Security would be in far worse financial shape.

Image source: Getty Images.

Here’s what’s really behind Social Security’s worsening outlook

If theft isn’t the answer, you might be wondering what’s to blame for Social Security’s financial malaise. The correct answer lies with a number of ongoing demographic changes. Some of these are well-known, while others remain under-the-radar or are largely misunderstood.

For example, you’re likely aware that baby boomers have been retiring for more than a decade. Not enough new workers are entering the labor force to take the place of boomers, thusly leading to a decline in the worker-to-beneficiary ratio.

Further, Americans are living notably longer in 2025 than they were when the first Social Security retired-worker benefit was mailed in January 1940. To be blunt, Social Security was never designed to offer payouts for multiple decades to retirees.

But not all demographic shifts are as easy to spot.

For instance, the total fertility rate in 2023 — a measure of how many children is born per woman within a specific age range of the population — dropped to an all-time low of 1.62. The fertility rate needs to be 2.1 for a population to replace itself and remain stable. With new births dropping for a variety of reasons, the worker-to-beneficiary ratio is likely to be weighed down in the years to come.

We’ve also witnessed a near-halving in net legal migration into the U.S. since 1997. Legal migrants serve an important purpose for Social Security’s financial well-being. Most migrants tend to be young, which means they’ll spend decades in the labor force contributing via the payroll tax, which is the primary funding mechanism for Social Security. The net migration rate is currently running well below where it needs to be to support America’s leading social program.

Rising income inequality is an issue, as well. In 1983, approximately 90% of all earned income, which includes wages and salary but not investment income, was subject to the 12.4% payroll tax. But as of 2023, data from the Social Security Administration shows that only 83% of earned income was subject to the payroll tax. Wages and salary for high earners have grown at a faster pace than the National Average Wage Index, which is what dictates the upper bound of the payroll tax earnings cap.

Lastly, lawmakers can be blamed — but not for theft. Rather, Congress foots the blame for not finding a middle-ground solution to strengthen Social Security. The longer lawmakers kick the can, the costlier it’s going to be to “fix” Social Security.

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