Social Security Benefit Cuts Are Coming, and President Donald Trump May Have Sped Up the Process

For most aging workers, Social Security benefits aren't a luxury. It's income that retirees would struggle to make do without.

For nearly a quarter century, Gallup has surveyed retirees to gauge their reliance on Social Security income and has found that 80% to 90% of retired workers rely on their monthly payouts, in some capacity, to make ends meet.

Strengthening the financial foundation of America's leading retirement program should be of the utmost importance for lawmakers. However, decades of reports show the short- and long-term financial outlook for Social Security is worsening.

While President Donald Trump has vowed to protect this leading social program, the uncomfortable reality is that his actions may have sped up the timeline to sweeping benefit cuts.

President Trump delivering remarks to a joint session of Congress. Image source: Official White House Photo.

Social Security benefits may be slashed by up to 23%

Every year since the first Social Security check was mailed in January 1940, the Social Security Board of Trustees has published a report detailing the financial ins and outs of the program. The annual Trustees Report allows anyone to see how Social Security generates income and where those dollars end up.

However, the Trustees Report is best-known for its financial forecasting.

Over the last four decades, the Trustees have cautioned that Social Security's long-term (75-year) funding would be insufficient to cover its outlays (primarily benefits, but also administrative expenses). As of the 2025 Trustees Report, this long-term unfunded obligation had swelled to $25.1 trillion.

But the greater threat to the monthly checks of Social Security beneficiaries is the projected depletion of the Old-Age and Survivors Insurance trust fund's (OASI) asset reserves. The OASI is the fund that doles out monthly benefits to more than 54 million retired workers and 5.8 million survivor beneficiaries.

The 2025 Trustees Report estimates that the OASI's asset reserves -- the excess income built up since inception that's invested in special-issue, interest-bearing government bonds, as required by law -- will be exhausted by 2033.

On the one hand, the OASI doesn't need a penny in its asset reserves to continue paying benefits to eligible recipients. This means Social Security isn't going bankrupt and won't be insolvent.

But a complete depletion of the OASI's asset reserves would indicate that the existing payout schedule, inclusive of cost-of-living adjustments (COLAs), isn't sustainable. If the OASI's asset reserves are gone by 2033, sweeping benefit cuts of up to 23% may be necessary to sustain long-term payouts for retired workers and survivors of deceased workers.

Image source: Getty Images.

Trump's "Big, Beautiful Bill" creates a big, unpleasant mess for Social Security

How does this forecast tie into President Trump? Look no further than his flagship tax and spending law that was signed in July 2025, the "Big, Beautiful Bill," or BBB for short.

The BBB established several temporary tax breaks from calendar years 2025 through 2028. This includes:

• The senior deduction, which boosts the standard deduction for qualifying individuals aged 65 and above by $6,000 (or $12,000 for joint filers).
• The "no tax on tips" deduction, which allows a dollar-for-dollar deduction of up to $25,000 for eligible workers.
• The "no tax on overtime" deduction that allows certain workers to claim up to $12,500 (single) or $25,000 (joint filers) in overtime pay deductions.

The senior deduction should lower the percentage of retired-worker beneficiaries who owe federal income tax on some portion of their benefits.

While the BBB has provided an income boost for some Americans, it's threatening to worsen Social Security's financial outlook.

There are three ways that Social Security collects income:

1. The 12.4% payroll tax on earned income (wages and salaries, but not investment income) up to $184,500 in 2026.
2. The interest earned on the OASI's and Disability Insurance trust fund's asset reserves.
3. The taxation of Social Security benefits.

US Net Payroll Tax Contributions to Old-Age, Survivors, and Disability Insurance Trust Fund Receipts data by YCharts.

Income from payroll taxes accounted for 91.2% of the nearly $1.42 trillion collected in 2024. Since the BBB reduces the earned income subject to the payroll tax, Social Security will collect less from its primary income source from calendar years 2025 through 2028.

Following a written request from the ranking member of the Senate Finance Committee, Ron Wyden (D-OR), the Social Security Administration's Office of the Actuary (OACT) estimated Trump's BBB would "cost" America's leading retirement program $168.6 billion over 10 years (2025-2034). In other words, Trump's flagship bill is expected to widen Social Security's already mammoth funding obligation shortfall.

Worse yet, the OACT projects that the tax effects of the Big, Beautiful Bill will shift the OASI's asset reserve depletion timeline forward to the fourth quarter of 2032. If this estimate proves accurate, retired-worker beneficiaries and survivors of deceased workers are only six years away from having their payouts slashed.

To be clear, the BBB isn't the reason Social Security finds itself an estimated $25.1 trillion in the hole through 2099. Several ongoing demographic changes have been detrimental to the program, including:

• The ongoing retirement of baby boomers
• Increased longevity
• A historic low in U.S. birth rates
• A significant decline in legal migration into the U.S. since the late 1990s
• Rising income inequality

The adverse effects of these demographic shifts existed long before the BBB was signed into law. Nevertheless, the flagship legislation of Trump's second term appears to have sped up the timeline to Social Security benefit cuts.

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