At that point, unless Congress acts, the system will only have enough payroll tax revenue coming in to pay about 77% of scheduled benefits—triggering an automatic across-the-board cut of around 23% for all recipients.
For decades, Social Security collected more in taxes than it paid out, building up a trust fund that earned interest. But the math flipped in 2021: America’s aging population means there are fewer workers paying into the system for each retiree drawing benefits. Recent tax changes and new laws have accelerated the shortfall, moving up the date of potential cuts.
Congress needs to act within the next few years to prevent automatic benefit reductions. Lawmakers have several options—most likely, a combination of them will be required:
The Bottom Line: Social Security will not “run out of money” entirely; it will always have payroll taxes coming in. However, if Congress does not shore up the trust fund by 2033, automatic benefit cuts of approximately 23% will occur under current law. Most experts and lawmakers believe a fix is likely, but recipients should watch closely.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
