Social Security turns 90 this year, and as the Social Security Trustees’ 2025 annual report makes clear, the program is on shaky ground. If policymakers fail to act before 2033, every single Social Security recipient’s check will be cut by 23% across the board—regardless of whether that recipient is a 68-year-old multi-millionaire or a 93-year-old widow living on Social Security alone.
As the program stands today, with Social Security’s trust fund set to run dry in just eight years, everyone from Generation X to Generation Beta will never receive a single full benefit.
That’s because Social Security has come to function like a Ponzi scheme. In each of the past 15 years, Social Security paid out more in benefits than it collected in taxes. Those imbalances have been whittling away at the program’s trust fund.
And once the trust fund runs dry, the law prevents Social Security from paying more in benefits than it collects in taxes—ultimately resulting in the 23% benefit cut. On average, that cut will result in a loss of $5,300 per year for a typical beneficiary.
The prospect of 23% benefit cuts is a hard pill to swallow, both for the 61 million retirees who paid into the Social Security system their whole lives and for the 184 million workers who are currently paying into a system that doesn’t set aside their taxes for the future but instead immediately sends them out the door to current retirees.
This wasn’t what Social Security’s creators intended. And it’s not what America’s retirees deserve.
But raising taxes to maintain scheduled benefits would deal a significant blow to current workers and younger generations—who are already struggling to buy homes or pay for ordinary expenses.
According to the Social Security Trustees, if policymakers were to raise taxes immediately to maintain current benefit levels, workers’ payroll taxes would have to rise by 3.65 percentage points from 12.4% to 16.05%. That would mean a $2,400 tax hike, amounting to a total of $10,700 in Social Security taxes per year for a median worker earning $66,600 per year.
On the other hand, if policymakers wait until Social Security’s trust fund runs dry and try to maintain scheduled benefits through tax hikes alone, they’d have to raise the Social Security tax to 16.67%—$3,500 more per year in Social Security taxes for a typical worker.
But higher taxes wouldn’t make Social Security a better deal for workers. After all, extra money spent on taxes doesn’t grow in value over time as it would if put into a retirement account. Instead, that money would immediately be used to pay retirees’ benefits.
That’s the opposite of what Social Security’s founders intended. One of the goals in creating Social Security was to prevent younger Americans from having to financially support older Americans.
Confronting Social Security’s $25.1 trillion shortfall—the additional amount required to maintain scheduled benefits for the next 75 years—will not be easy. That amounts to $192,000 for every household in America.
But the longer policymakers wait, the larger that amount becomes. Over just the past year, Social Security’s shortfall increased by $2.5 trillion, or an extra $19,000 per household. Over the past decade, Social Security’s shortfall increased by 135%, from $10.7 trillion to $25.1 trillion.
The good news is that there are ways to reform Social Security that would increase benefits for those most in need, improve the program for everyone, and even aid economic growth. Those reforms include modernizing the program, gradually shifting towards a more progressive benefit structure, and providing an option for individuals to build personal wealth over time.
