People waiting in line outside the Social Security Administration office in San Francisco.
Social Security, an essential federal program that provides income for millions of Americans, is experiencing a funding shortfall tied to its trust funds. Still, this doesn’t spell bankruptcy or total benefit loss.
According to Stephen Nuñez from the Roosevelt Institute, there’s “no bankruptcy or collapse in the cards.” His research article raises the question of whether Social Security will vanish, stating that this is the wrong inquiry.
Many Americans seem anxious about the future of Social Security, and experts warn that such worries might influence when people choose to claim their benefits—one of the key financial choices in retirement. Unsurprisingly, those concerns could push individuals to claim earlier, which might mean lower monthly checks, ultimately weakening their benefits.
A 2025 survey revealed that around 74% of respondents feared they might run out of Social Security benefits during their lifetimes, based on a poll conducted by a national finance organization. Another study showed that about 30% believed they wouldn’t receive any benefits at all, and 70% expected future cuts.
In light of this, Nuñez reassured that Americans can expect some level of Social Security coverage to continue. He argues that the term “bankruptcy” doesn’t accurately depict the program’s financial issues.
Other retirement specialists echo this sentiment. Alicia Munnell from Boston University claims that even without any changes, most beneficiaries will still receive the majority of their payments.
Social Security has faced past financial challenges.
The government anticipates that the Social Security trust fund, which is crucial for paying out benefits, will be exhausted in around ten years. Trust funds, typically invested in Treasury securities, are not being used for benefit payouts.
Legislation, like the Social Security Fairness Act, has made these financial issues more urgent by increasing benefits for public pensioners. Predictions indicate that if Congress doesn’t intervene, beneficiaries could see around a 24% cut in benefits by 2032.
Nuñez highlighted that while payroll taxes keep funds flowing, without changes, the implications for benefits could vary significantly. These might include across-the-board cuts or prioritizing payments for the most vulnerable, among other scenarios.
Interestingly, Social Security has navigated similar crises in the past. Back in 1982, the retirement trust fund ran out, prompting temporary solutions like borrowing from other funds.
Subsequent legislation in 1983 aimed to reinforce its finances by raising the retirement age and taxing benefits. This was part of a longer-term strategy for a program that’s been around for 75 years now.
However, the predicted deficit is set to arrive much sooner this time around. Nuñez pointed out that lawmakers were ahead of the curve in anticipating the influx of baby boomers, but unexpected shifts like income inequality and the Great Recession led to earlier depletion rates.
Impact of income inequality and economic shifts.
These two factors caused reserves to start drying up as early as 2009, instead of the initial forecasts for 2021. Nuñez mentioned that if the trust fund had evolved as expected, depletion would have pushed to around 2063.
Income inequality affects collections from FICA payroll taxes, which only apply to income up to a set cap that adjusts yearly—in 2026, it will be $184,500. Historically, 90% of income fell below this cap in 1983, but the landscape has shifted since then.
Nuñez noted that although real profits surged, the benefits were unevenly distributed; the top earners outpaced the cap, leading to less revenue for the program.
The Great Recession also added pressure on Social Security’s funding, with rising unemployment resulting in lower payroll tax income as older workers opted for early retirement.
Congress faces a critical moment regarding Social Security.
It now falls to lawmakers to decide how to tackle the shortfall, whether through increasing taxes, cutting benefits, or a mix of both. Nuñez stressed that the longer it takes to decide, the greater the costs will become.
With the earliest depletion anticipated by 2032, upcoming elections could play a pivotal role in determining the program’s future.
Nuñez believes lawmakers will have no choice but to act on Social Security sooner rather than later.
Current lawmakers have committed to preserving Social Security, yet their actions have largely led to inaction rather than meaningful reforms, according to Maya McGuineas, leader of the Committee for a Responsible Federal Budget. It’s crucial for voters to advocate for necessary changes that will influence contributions and benefit levels moving forward.
The ultimate decision-makers will heavily impact how Social Security evolves in the coming years.
