The Chief Actuary Just Updated When Social Security Cuts Could Begin -- Here's What to Know (Spoiler: Part of the Problem Is Tied to President Trump's "Big, Beautiful Bill")

There's a lot to celebrate about Social Security. For one thing, it turned 90 in August -- after being signed into law in 1935 by President Franklin Roosevelt. It remains a critical program. According to the Center on Budget and Policy Priorities, "Social Security lifts more people above the poverty line than any other program" -- some 22 million people, to be exact.

Unfortunately, Social Security's coffers are facing a shortfall that's coming at us soon. Here's a look at the latest information from the program's chief actuary.

Image source: Getty Images.

Taxes coming in, benefits going out

Social Security has run into a problem, though, due in part to people living longer and often retiring earlier. Whereas it once ran a surplus, taking in more in taxes from workers than it paid out to beneficiaries, that surplus has been shrinking:

Source: Social Security Administration.
*Projected, in the 2024 Social Security Trustees report.

What trouble is predicted?

Social Security's trustees report on the program regularly, and their June report noted that at the current expected rate of depletion, the surplus would run dry by 2033 -- only about eight years from now. At that point, it was estimated that benefits would shrink, with beneficiaries only collecting 77% of what was due to them.

The situation has gotten worse due to actions by the Trump administration. As Social Security's Chief Actuary, Karen Glenn, reported in August, the surplus is likely to run dry in 2032, not 2033. (To be more specific, it has been moved from the first quarter of 2033 to the fourth quarter of 2032.)

At fault for the revision is President Trump's "One Big Beautiful Bill Act" (OBBBA), which will shrink taxes taken in between 2025 and 2028 by temporarily hiking the standard deduction for taxpayers aged 65 and older, giving eligible tipped workers the ability to deduct up to $25,000 in tips per tax return, and allowing the temporary deduction of overtime pay for eligible taxpayers. These changes will in turn reduce the amount of tax revenue that comes from taxation of Social Security benefits, shrinking the trust funds' surplus faster.

There's a more insidious problem afoot, though, and it's a purely demographic one: That ratio of taxed workers to beneficiaries is likely to keep shrinking, which may bring the end of the surplus even closer to us.

Good news: There are solutions!

Fortunately, the Social Security shortfall can be avoided -- and a new surplus can grow. But that will take our Congress acting on the problem. (Consider letting your representatives know, if you'd like them to!)

The two main ways to fix Social Security are to shrink benefits or increase revenue coming into the coffers. The Committee for a Responsible Federal Budget (CRFB) created The Reformer -- a clever tool that lets any of us enter various proposed changes to the program to see what percentage of the projected shortfall will be closed by each of them.

Below are some of the proposed solutions, along with the percentage of the shortfall they'd cover, according to the CRFB.

Source: CRFB.org.

Here are explanations and context for some of the proposals:

• The payroll tax for Social Security is currently 12.4%, split equally between employee and employer -- 6.2% each. (Yes, your company contributes as much as you do -- though self-employed people pay the full 12.4%.) The CRFB looked at hiking that by various percentage points.
• Right now, there's an earnings limit beyond which we are not taxed for Social Security. It increases regularly and is currently $176,100. So someone who earns $1,176,100 pays as much into Social Security as someone who earns $176,100. Various proposals suggest taxing everyone's entire earnings or at least more than the current cap.
• The average monthly Social Security benefit was only $2,008 as of August -- amounting to about $24,000 over a year. But many people collect much smaller sums. Guaranteeing a minimum benefit would help them -- and, apparently, won't hurt the program all that much.
• Finally, some recommend means-testing beneficiaries, so that high earners would have their benefits phased out.

If just a few of the above potential solutions were enacted, Social Security could actually be strengthened -- so that its surplus could last longer, and so that it might even pay average beneficiaries more than $24,000 per year.

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