Social Security Held Up Better Than Anticipated in 2025, But Major Changes Are Coming Soon

Social Security looks a lot different today than it did when Congress first passed the Social Security Act over 90 years ago. Odds are it'll look even more different within just a few years.

Unless Congress acts to make some significant reforms to the program, Social Security is set to deplete its trust fund before the end of 2032, according to the most recent estimate from Chief Actuary Karen P. Glenn. At that point, Social Security is only legally allowed to pay out as much in benefits as it brings in in revenue.

The good news is that 2025 actually turned out better than Glenn and the team of actuaries at the Social Security Administration expected. The bad news is that the trend probably won't last.

Here's what's driving the deficit at Social Security, and the major changes workers and retirees can expect over the next few years.

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The Social Security deficit continued climbing higher in 2025

There are a few big issues causing the Social Security program to run a deficit and start liquidating its trust fund.

First and foremost is a shift in demographics. As the last of the baby boomers reach retirement age and life expectancies extend, the number of retirees collecting Social Security has grown faster than the number of people in the workforce. The ratio of workers to retirees stood at 2.7-to-1 in 2024. However, as the rest of the baby boomers enter retirement, that ratio will fall to 2.3-to-1 in 2035.

As a result, the benefits Social Security pays out to retirees are growing faster than the tax revenue received from standard payroll taxes. Exacerbating the issue is growing income inequality. Social Security only collects taxes on the first $184,500 of wages earned in 2026. (The threshold was lower in previous years.) As a result of a handful of workers seeing their wages grow much higher while everyone else sees more modest increases, a smaller percentage of total payroll is subject to Social Security tax over time.

The Social Security actuarial estimate for 2025 called for the combined Old Age, Survivors, and Disability Insurance Trust Fund to run a deficit of $181.4 billion based on its intermediate projections. However, the deficit only totaled $160.2 billion last year.

That may lead some to think Congress has a bit more time than anticipated last year. But several developments could make 2026 much worse, which could actually accelerate the timeline.

The new tax code, introduced in 2025, will have a noticeable effect on Social Security revenue in the second quarter of this year. The new $6,000 senior deduction will cancel out some taxes on Social Security benefits themselves. That could lead to a decline in Social Security revenue in Q2 after it barely budged in 2025. Glenn estimates that the new deduction will accelerate the timeline for Social Security's depletion.

Additionally, the Trump administration's immigration crackdown has resulted in fewer immigrant workers, reducing the amount of payroll subject to Social Security income. As a result, the SSA could see a noticeable slowdown in tax revenue growth in 2026, while benefits paid continue to grow faster.

How Congress could reform Social Security

Congress needs to act before Social Security depletes its Old Age and Survivors Insurance Trust Fund. As mentioned, Glenn estimated in an update last summer that it would happen before the end of 2032, but that date could move closer based on the developments noted above. Importantly, the sooner Congress acts, the less severe the changes will have to be to put Social Security on a healthy course.

The changes will likely require sacrifices from everyone participating in Social Security: Workers, near-retirees, and current beneficiaries. Some of the most common and most effective proposals include increasing the full retirement age, changing the formula for calculating benefits, changing how the annual COLA is calculated, and increasing the tax rate or amount of wages subject to Social Security taxation. In all likelihood, Congress will use nearly all of those methods to extend Social Security's life.

For workers, that means they could have to pay more in taxes and work longer to receive their full benefit. For retirees, it could mean smaller COLAs or paying more taxes on their benefits payments.

If Congress fails to act, Social Security will have to indiscriminately cut benefits. It's a far better outcome if Congress controls how cuts to the program affect their constituents, ensuring Social Security continues to help those who need it most. One way or another, though, major changes are coming to Social Security soon.

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