I’ve lost track of how many blog posts I’ve written about Social Security going broke. Over the years there have been quite a few and always the news is grim. But the latest news, which came out in the form of a trustees report published this summer says that by 2033 the old age portion of Social Security will be unable to pay full… benefits to the millions of people who receive it. The Post had a story about it back in June:
…in last year’s annual report, the trustees projected that Social Security would become insolvent by 2035 and Medicare in 2036. They now predict that Social Security’s fund will run out of money in 2033, or in 2034 if Congress changes the law to combine the separate funds for old-age benefits and for disability insurance…
For years, the programs have been spending more money than they take in, as an aging workforce means more retirees are receiving benefits and fewer workers are paying taxes into the system.
If the trust funds dry up, retirees will still receive benefits as long as workers are paying the payroll taxes. But the amount will drop…
In addition, the trustees predicted slower earnings growth for workers over the next decade than they had previously forecast.
They also reassessed their predictions about the U.S. birth rate. While Wednesday’s report still predicts the U.S. fertility rate eventually will reach 1.9 children per woman, up from 1.6 currently, the trustees now see that change fully occurring by 2050, instead of their previous prediction of 2040 — which means a longer period of fewer workers paying into the program.
Social Security is in theory a trust fund. People pay into it through a payroll tax and, if you ask them, most Americans have the impression that the money goes into a big bank account to hold onto it for them until they are ready to retire.
In reality, all of the money goes into the general fund and trust fund has no separate pot of money available to it. This means the system is really a pay-as-you-go arrangement. The money going to retirees right now is money being paid in by current wokers plus a bit more taken from the treasury because current workers no longer cover the amount of the payments. Payments began exceeding receipts in 2021.
For some reason, Axios decided to turn this old news into a news story last week.
There is a tug-of-war between the benefits future retirees receive and the taxes that working-age people pay. Something has to give, and surprisingly soon.
The big picture: The Social Security retirement fund is set to be depleted in 2033, at which point recipients would see a steep cut to their monthly checks absent congressional action.
Nobody in U.S. politics wants that to happen, but there are deep divides over how to address the imbalance — or, perhaps more accurately, elected officials would prefer not to talk about the hard trade-offs ahead.
This is all true but it has been true for years. Even the news about going broke in 2033 is six months old at this point.
In any case, there are only two options moving forward. One is to raise taxes substantially, which won’t matter much since we’re currently running a deficit of $1.5 trillion a year. Raising payroll taxes enough to cover the projected shortfall of the Social Security Trust Fund (about $350 billion in 2033) won’t do anything about the rest of the trillions we spend despite not having the money.
The other option is to cut benefits. But you can bet the Democrats will raise hell the moment anyone suggests that. They’ve been doing it for the past 30 years.
So we’re stuck and it’s hard to imagine how we can move forward. But the deadline keeps getting closer. It’s almost 2025 at which point the program going broke is only 7 years away, at best. At some point, some adults in the room are going to have to fix this problem or a lot of Americans aren’t going to get the retirement money they were promised.
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Is Social Security Going Broke?
Social Security has been prominent in the news of late, but that’s really nothing new. For decades retirees and workers paying into their Social Security accounts have been concerned about whether or not there will be enough money to pay them their benefits when they retire.
Of course, Social Security is more than a retirement program. It is insurance that provides retirement, survivors, and disability benefits. It currently issues checks to roughly 73 million people every month.
Will you be able to collect your benefits when you retire, or if you are disabled?
The answers, or projections, are provided each year in a collection of reports from the agency’s trustees, which include the Commissioner of Social Security as well as the Secretaries of the Treasury, Health and Human Services, and Labor. The reports, titled Status of the Social Security and Medicare Programs, are based on actuarial studies, released to the public by the trustees through the Office of the Chief Actuary of the Social Security Administration.
The most recent collection, dated 2024, essentially repeats the outlook from 2023. “As in prior years,” the opening “a message to the public” reads, “we found that the Social Security and Medicare programs both continue to face significant financing issues.”
The outlooks for Social Security differ for the retirement and disability programs. According to the report:
- The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033. At that time, the fund’s reserves will become depleted and continuing program income will be sufficient to pay 79 percent of scheduled benefits. The projected 21 percent shortfall after 2033 is based on estimates of future payroll taxes as well as benefits payments.
- The Disability Insurance (DI) Trust Fund is projected to be able to pay 100 percent of total scheduled benefits through at least 2098, the last year of this report’s projection period.
Should retirees and workers be concerned about the agency being unable to cover 100 percent of its obligations only eight years from now?
John Johnston, a retired public affairs specialist with the Social Security Administration who advises financial services companies as a consultant on Social Security, offered the following insights:
- Ideally the agency should be able to confirm solvency for 75 years into the future. Though that has not been the case since the 1990s, a period of high prosperity. A high-performing economy helps solvency because more workers making more money results in more and bigger payments into Social Security.
- The fund became unbalanced in 2021, that is, payroll taxes taken in were not enough to cover payments going out. Previously the monies not needed to make payments were invested in specially issued Treasury bonds. Since 2021, interest from those bonds is being used to provide the additional funds needed to meet payments. Those additional moneys will be depleted by 2033.
- Changes will be required to ensure Social Security solvency beyond 2033. One of the suggestions: Raise the retirement age. Another: Invest about a third of the current payroll taxes withheld for Social Security—6.2 percent for both employer and employee, or 12.4 percent total—in marketable securities as opposed to the Treasury bonds. “We floated that idea in a series of town halls around 2004 and 2005 and it was extremely unpopular,” Johnston said. Of note, Congress is responsible for any changes to be made to the program and program benefits.
Is it time for changes?
“Social Security is woven into the fabric of our economy,” Johnston said. “It’s the sole income of 35 percent of retirees.”
Johnston is confident changes will be made to ensure ongoing payments. “We don’t pull the rug out from under older folks,” he affirmed. “Still changes are needed, so they are likely to affect younger workers. We haven’t had an overhaul since the 1984 amendments, which created the trust funds and the purchase of treasury bonds.”
The Trump Administration has proposed cuts to the Social Security workforce, most recently about 12 percent or roughly 7,000 of the current 57,000 employees. While that should not impact the flow of current payments, cuts and departures are already affecting some services. Johnston advises workers nearing retirement age to apply for their benefits as early as allowable, that is, four months before they want to start receiving benefits.
The Office of the Chief Actuary has published an analysis of the various proposed changes to Social Security to address future deficits. For a description of each option and estimated effects on the OASSI and DI programs, go to the Social Security website.
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Key Moments in the History of Social Security
Social Security was born nearly 90 years ago, in August 1935. Over the decades, it has matured into a vital source of inflation-adjusted income for retirees, people with disabilities, and their dependents and survivors. In March 2025, the program paid nearly $139 billion in benefits to 73.6 million Americans — more than one-fifth of the population. Here’s a timeline of significant events in the history of Social Security.
June 8, 1934: In a message to Congress, President Franklin D. Roosevelt outlines his goal to establish a national social insurance program featuring guaranteed benefits for retired workers. Three weeks later, he creates the Committee on Economic Security, composed of top cabinet members, to develop the program.
Jan. 17, 1935: After receiving the Committee on Economic Security’s report, FDR introduces the Economic Security Act, which would become the Social Security Act.
AARP (Source: Getty Images (2), AP Newsroom)
Aug. 9, 1935: Congress passes the Social Security Act.
Aug. 14, 1935: President Roosevelt signs the Social Security Act into law.
October 1936: The Social Security Board, precursor to today’s Social Security Administration (SSA), moves into its first headquarters — the Candler Building, a former Coca-Cola bottling plant on the Baltimore waterfront. No building available in Washington, D.C., could meet the program’s enormous space requirements for paperwork and filing cabinets.
November 1936: The first Social Security cards are issued. As the program is just beginning to open local offices nationwide, cards are initially distributed through post offices.
Left: A stack of Social Security applications. Right: Ida M. Fuller was first Social Security monthly beneficiary.
Jan. 1, 1937: The fiirst Social Security benefits are issued as one-time, lump-sum payments.
Aug. 10, 1939: The program is broadened to include benefits for workers’ dependents and survivors.
Jan. 31, 1940: Ida M. Fuller receives the first monthly Social Security benefit. Her first check is for $22.54, the inflation-adjusted equivalent of about $519 today. Fuller lived to the age of 100.
October 1950: After a decade-plus of benefit amounts remaining the same,Congress authorizes the first Social Security cost-of-living adjustment (COLA), an increase of 77 percent.
Aug. 1, 1956: TheSocial Security Act is amended to provide benefits to workers with disabilities ages 50 to 64 and to adults with disabilities dating to childhood. Another amendment allows women to claim Social Security as early as 62, albeit with a reduced benefit. Previously, no one could claim retirement benefits until age 65.
January 1960: The SSA opens its new headquarters in Woodlawn, Maryland, just west of Baltimore. The sprawling suburban complex remains Social Security’s main campus.
September 1960: President Dwight Eisenhower signs legislation expanding eligibility for Social Security disability benefits. Payments can now go to workers of any age with disabilities and to their dependents.
June 30, 1961: The Social Security Act is amended to reduce the minimum eligibility age for retirement benefits to 62 for all workers, regardless of gender.
July 30, 1965: President Lyndon Johnson signs Medicare into law. The SSA is put in charge of administering enrollment for the national health insurance program serving Americans ages 65 and older (and later expanded to cover younger people with disabilities).
AARP (Source: Getty Images(5))
July 1, 1972: President Richard Nixon signs legislation establishing an annual, automatic COLA for Social Security payments, starting in 1975. Under the old system, adjusting benefits for inflation required congressional approval. The measure also mandates a yearly adjustment to the taxable wage base — the amount of a worker’s income subject to Social Security taxes.
Oct. 30, 1972: Congress establishes Supplemental Security Income (SSI), a national benefit program administered by Social Security that provides monthly cash payments to people who are 65 or older, blind, or have a disability and have very low incomes and limited assets.
July 1975: The first annual automatic COLA kicks in, boosting benefits by 8 percent.
Sept. 20, 1977: President Jimmy Carter signs legislation increasing the employee share of the payroll taxes that fund Social Security and Medicare from 6.05 percent of a worker’s gross wages to the current rate of 7.65 percent, to be phased in through 1990.
July 1980: Reflecting the so-called “Great Inflation” of the late ‘70s, Social Security beneficiaries receive the highest annual COLA increase to date: 14.3 percent.
April 20, 1983: President Ronald Reagan signs the Social Security Amendments of 1983, a set of sweeping changes aimed at shoring up the program’s shaky financial footing drawn from recommendations of the National Commission on Social Security Reform (also known as the Greenspan Commission). Provisions include accelerating the scheduled payroll tax increase enacted in 1977; gradually raising the full retirement age (FRA) from 65 to 67; and making 50 percent of Social Security benefit income taxable for recipients with overall incomes above $25,000 for an individual and $32,000 for a married couple filing jointly.
Oct. 1, 1988: A nationwide toll-free number, 800-772-1213, is established for people to contact the SSA.
Aug. 10, 1993: President Bill Clinton signs the Omnibus Budget Reconciliation Act, a massive package of tax increases and spending cuts that includes a provision raising the share of Social Security benefits subject to income tax from 50 percent to 85 percent for beneficiaries with incomes above $34,000 (single) or $44,000 (couple).
AARP (Source: BILL SMITH/BRADLEY C BOWER/AP PHOTO/SSA)
May 17, 1994: The SSA official website is launched.
Oct. 1, 1999: Annual mailings of Social Security statements began. About 125 million workers ages 25 and older were sent statements showing their earnings history and projected benefits.
April 7, 2000: The Senior Citizens’ Freedom to Work Act of 2000 was signed into law, eliminating the Retirement Earnings Test (RET) for beneficiaries at or above full retirement age. (The earnings test still applies to those claiming retirement benefits before reaching their FRA.) The RET was an original feature of the Social Security Act.
AARP (Source: Getty Images (2))
Feb. 12, 2008: Kathleen Casey-Kirschling, the first baby boomer to apply for Social Security retirement benefits, received her first monthly payment.
May 1, 2012: Social Security statements become available online. Paper statements have largely been phased out; today, they only go out automatically to workers 60 and over who are not yet collecting benefits and have not set up an online My Social Security account.
AARP (Source: Getty Images (3))
March 17, 2020: Social Security field offices shut down because of the COVID-19 pandemic. Several months later, they begin offering in-person appointments in rare, “dire need” situations, but most services were offered only online or by phone.
April 7, 2022: Field offices fully reopen after more than two years of pandemic restrictions.
June 18, 2025: Social Security’s trustees release their 2025 annual report, which projects that the two trust funds from which benefits are paid will run short of reserve funds in 2034 unless Congress acts to shore up the program’s finances, as it did in 1983. Absent such action, the SSA will be able to pay only about 81 percent of scheduled benefits.
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