Key Points

• The annually published Social Security Board of Trustees Report has been forecasting a long-term funding shortfall for America’s leading retirement program every year since 1985.

• Though Social Security is in no danger of bankruptcy or halting payments, the existing payout schedule for retired workers and survivor beneficiaries may be meaningfully altered in eight years.

• Reforming Social Security is easier said than done.

For most retirees, Social Security income is a necessity. In each of the last 24 years, Gallup has polled retirees to determine how important Social Security income is to their financial well-being. In 2025, 86% noted it was a “major” or “minor” income source, which is in line with the 80% to 90% of respondents who, for nearly a quarter of a century, have leaned on their payout, in some capacity, to make ends meet.

But even though Social Security has been a pillar of consistency for aging workers since the first check was mailed in January 1940, it’s on anything but stable ground.

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Based on the latest estimates from those who know the Social Security program inside and out, benefit cuts are possible for retired workers and survivors of deceased workers in as little as eight years. Worse yet, the amount that benefits are expected to be cut if Congress implements no reforms is even bigger than initially forecast.

Image source: Getty Images.

The long-term outlook for America’s leading retirement program is worsening

Every year since 1940, the Social Security Board of Trustees has published a report that examines the current and forward-looking financial health of America’s leading social program. In addition to detailing how Social Security brings in its revenue and showcasing how it gets spent, this annual report focuses on changes in fiscal and monetary policy, as well as demographic shifts, to estimate how financially sound Social Security is over the coming 75 years (what the Trustees define as the “long term”).

For four decades, the Trustees Report has warned of a long-term unfunded obligation. In other words, the Trustees projected the amount of income that would be collected over the 75 years following a report and compared that figure to estimated outlays, including annual cost-of-living adjustments (COLAs) and the program’s administrative expenses. Every year since 1985, the Trustees have determined that long-term outlays would surpass income.

In the 2025 Trustees Report, this estimated 75-year cash shortfall hit a whopping $25.1 trillion. While this long-term funding obligation shortfall is sometimes attributed to “congressional theft” or “undocumented migrants receiving traditional Social Security benefits,” neither of these scapegoats is accurate.

Rather, Social Security’s worsening financial health is primarily the result of a multitude of ongoing demographic shifts. In no particular order, this includes:

• The retirement of baby boomers
• Increased longevity over multiple decades
• Rising income inequality
• A notable decline in net legal migration into the U.S.
• A historically low U.S. birth rate

Social Security benefits can be cut in as little as eight years

However, Social Security’s long-term funding shortfall isn’t the most immediate threat for beneficiaries. The biggest concern pertains to the dwindling asset reserves for the Old-Age and Survivors Insurance (OASI) trust fund, which is the fund responsible for doling out monthly benefits to retired workers and survivor beneficiaries.

US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.

The OASI’s asset reserves represent the excess capital — in other words, income collected minus outlays — brought in since inception that’s invested in special-issue, interest-bearing government bonds, as required by law. In 2020, the OASI’s asset reserves grew by a modest $7.4 billion to $2.812 trillion. But every year since 2020, outlays have outpaced income collected.

Last year, the OASI endured an outflow of $103.2 billion from its asset reserves. This year, it’s projected to double to an outflow of $209.3 billion. Due to the numerous demographic shifts described earlier, this once $2.8 trillion reserve is projected to run dry by 2033.

To be abundantly clear, the OASI doesn’t require a cent in its asset reserve to continue paying benefits to eligible retirees and survivors. Bluntly, Social Security is in no danger of going bankrupt, becoming insolvent, or stopping benefit checks. But what is at risk, if the OASI’s asset reserves are exhausted, is the existing payout schedule, including COLAs.

The 2025 Trustees Report estimates that if nothing is done to counter the downward trajectory of the OASI’s asset reserves, “OASI income would be sufficient to pay 77 percent of OASI scheduled benefits.” In simple terms, payments would be reduced by a projected 23% come 2033 to avoid any additional benefit cuts through 2099. This is up from the 2024 Trustees Report, which called for a 21% cut to OASI benefits in 2033.

In present-day dollars, a 23% haircut would lower the average retired-worker check (which crossed above $2,000 for the first time in May) by approximately $460.55 per month to $1,541.84.

However, Social Security benefits aren’t static. If we run with the assumption that cost-of-living adjustments will average 2.3% through 2033 — 2.3% is the average COLA over the last 16 years — the average retired-worker beneficiary should be receiving $2,401.89 per month by 2033. A 23% reduction from this level would remove $552.43 per month from the average retired-worker check eight years from now.

Image source: Getty Images.

Social Security reforms may still be years away

With the Trustees Report pointing to trouble every year for four decades, you’d think maintaining the financial stability of Social Security would be the top priority of lawmakers in Congress. Unfortunately, reforming Social Security has proved challenging in multiple respects.

To begin with, all reforms result in some group of people ending up worse off than they were before. Whether you believe in increasing taxation on high earners or gradually raising the full retirement age, which would require future generations of workers to wait longer to receive their full benefit, no reform can be made without some group of people getting the proverbial short end of the stick. Lawmakers typically avoid tackling this sensitive issue because it can cost them votes in future elections.

Another reason Social Security’s well-documented issues are continually swept under the rug is because of the ideological differences between America’s two major political parties.

Though you can read about their respective approaches in greater detail, Democrats typically seek to increase revenue through taxation, whereas Republicans are focused on reducing long-term outlays. Since both of these strategies are effective at strengthening Social Security (albeit along very different timelines), neither party is willing to work with their opposition to find common ground.

This leads to the next point: The Social Security Act can only be amended with 60 votes in the Senate. It’s been 46 years (and counting) since either party has held a supermajority of seats (60) in the upper house of Congress. This means any reforms will require bipartisan cooperation, which has been mostly absent for decades.

Perhaps the one silver lining for retired workers is that Congress has previously come to Social Security’s rescue at the 11th hour. When lawmakers were forced to act in 1983 to avoid Social Security benefit cuts, they passed a major bipartisan overhaul of the program (the Social Security Amendments of 1983).

With the OASI still an estimated eight years away from depleting its asset reserves, lawmakers aren’t going to be in a hurry to reform Social Security. But based on Congress’s track record, an eventual “fix” seems likely. One question remains: How costly will it be for working Americans and retirees?

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