Social Security represents about 30% of the income of people over 65, with roughly a third of seniors relying upon their checks for at least half of their financial support. About 10% rely upon their benefits almost exclusively.

These individuals would have a difficult time making ends meet if their Social Security benefits were cut. That makes the program’s looming insolvency deeply concerning.

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A Congressional Budget Office (CBO) report from September projected that the program would reach insolvency in 2034, less than a decade from now. However, recent events suggest the program will face potential benefit cuts even sooner.

Social Security is running out of money

Social Security’s funding crisis is largely a result of demographic shifts in the country that began when baby boomers started retiring. This generation is known for being larger than most others. That was a good thing when they were all in the workforce paying Social Security payroll taxes. But when they began to retire, the program’s expenses rose steeply, and fewer workers were left behind to pay into it.

Social Security has two other funding sources: benefit taxes on some seniors and interest income earned on money in the program’s trust funds. But both of those are in danger right now.

The program’s total costs became higher than its total income in 2021, but its costs have been higher than the trust funds’ non-interest income since 2010. This means the program is currently sustaining itself by slowly draining its trust funds. But this won’t be possible forever.

The CBO report estimated that the trust funds would be depleted in 2034, but it could happen sooner. President Biden recently passed the Social Security Fairness Act, which increased Social Security benefits for 2.8 million government workers. While many applauded the rule change, others were concerned because the added drain that comes with higher benefits will accelerate the trust fund depletion date by about six months.

The problem could get even worse if President Trump succeeds in eliminating Social Security benefit taxes, a move he promoted during the 2024 presidential campaign. This would leave the program with just payroll taxes and the dwindling trust funds, which will get depleted even more quickly. So the benefit cuts seniors could face would be even more significant than they’re currently estimated to be.

How retirees and workers should prepare

There’s not a lot that most Americans can do to alter Social Security legislation, other than to petition their Congressional representatives. It’s up to them to decide how they want to increase funding for the program and whether they plan to reduce benefits for any seniors.

The government may have to increase the payroll tax on workers or tax a larger portion of wealthy Americans’ earnings. Currently, they only pay taxes on the first $176,100 they earn in 2025.

Other proposals for resolving the shortfall include raising the full retirement age (FRA) — the age at which workers become eligible for their full benefits based on their work history. This would effectively act as a benefit cut for younger adults because they would face steeper penalties for early claiming than today’s Social Security beneficiaries.

We don’t know what the government’s ultimate decision will be. But we know that Social Security will continue in some form well beyond 2034. Even if the government did nothing, the program would still be able to pay out about 77% of scheduled benefits in 2035, according to the CBO report. With some of the other changes listed above, benefits may not need to be reduced as much, if at all.

Since we have no way of predicting the future, it’s important to focus on what we can control now. Saving as much as you can for retirement on your own will reduce your reliance on Social Security, enabling you to better withstand whatever happens with the program.

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