Social Security's Trustees Are Sounding an Alarm, and We All Need to Listen

The latest Social Security Trustees' Report, released last week, brought some tough news for millions of beneficiaries: The program's trust funds are just six years away from depletion, and checks could face a 22% benefit cut after that unless the government intervenes.

This is obviously a huge problem, but buried underneath that headline-grabbing stat is a more likely and, to some, more dire issue outlined in the report. And Washington isn't doing anything to stop it.

Image source: Getty Images.

A 22% cut is unlikely, but someone is going to pay

The government is likely to pass legislation at some point to avoid the looming 22% Social Security benefit cut, just as it did when the program faced similar cuts in the 1980s. But so far, it hasn't been able to come together on a plan, despite several members of Congress submitting proposals over the years.

This is likely because every solution will make someone unhappy. With the program's trust funds depleted, it will rely solely on Social Security payroll and benefit tax revenue. Avoiding cuts likely means increasing one or both of these to ensure the program takes in enough money each year. But the longer the government waits to act, the more painful the necessary changes will be.

The table breaks down a few possible solutions the Trustees' Report proposed and how they might change if the government waits until 2034 to act vs. acting in 2026.

Data source: 2026 Social Security Trustees' Report.

The Trustees noted in the report that they "recommend that lawmakers address the projected trust fund shortfall in a timely way to phase in necessary changes gradually and give workers and beneficiaries time to adjust. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits."

But whether that happens remains to be seen. It ultimately comes down to lawmakers' decisions, so if you have strong feelings about what should happen to Social Security, reach out to your representatives and let them know.

Once Washington decides on a plan for Social Security, it'll be time to review your own financial plans for retirement. You may need to adjust your retirement savings rate or prepare to work a little longer before you retire. It's not ideal, but it could mean the difference between a comfortable future and an insecure one.

The Motley Fool has a disclosure policy.