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6h ago

Social Security Faces 23% Cut After Trust Fund Dries Up in 2033

Congress must decide whether to raise payroll taxes or reduce benefits to avoid automatic cuts set to take effect in 2033.

If Congress does not act, then U.S. workers face a 23% automatic Social Security benefit cut in a few years.
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Overview

  • The 2025 Trustees Report finds the Old-Age and Survivors Insurance fund will exhaust reserves by 2033 and combined OASI and Disability Insurance by 2034, triggering 23% and 19% cuts respectively.
  • The accelerated depletion timeline reflects lower wage-growth assumptions and the impact of the Biden-era Social Security Fairness Act, which expanded benefits for public-sector workers.
  • Without legislative changes, dedicated payroll taxes would cover only 77% of retiree and survivor benefits and 81% of combined benefits after trust fund exhaustion.
  • Lawmakers have three main options to close the gap: boost the FICA payroll tax rate, trim scheduled benefits or tap alternative federal revenues, such as general funds or new levies.
  • Financial planners urge workers to bolster personal savings, consider delaying benefit claims and extend their careers to hedge against the looming shortfall.