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Social Security’s retirement trust fund is projected to run out of money by 2033, with the disability trust fund running out a year later, according to the program’s June 2025 trustees report (1).
But the Committee for a Responsible Federal Budget estimates that the One Big Beautiful Bill Act — which reduces revenue collected from taxing Social Security benefits — will accelerate the program’s insolvency to 2032 (2).
Whatever may be the case, time is running out to make changes.
“That compressed timescale means there’s no easy fix,” according to an op-ed by Bloomberg’s editorial board (3).
“Tweaks that phased in gently while protecting current beneficiaries could’ve balanced the books by now if they’d been done many years ago. Starting from here, they won’t suffice to avoid the programs’ imminent insolvency.”
Decades of delayed action have only exacerbated the shortfall. Bloomberg’s editorial board argues that Washington must “break its promise” to Americans by making politically painful Social Security reforms, such as raising the retirement age.
While the word “insolvency” sounds catastrophic, Social Security won’t disappear — but without urgent action, Americans could see their benefits shrink in less than a decade.
As of April 2025, more than one-fifth of Americans — or 73.9 million people — benefit from Social Security, including 52.6 million retired workers and 7.2 million disabled workers. These benefits are funded through a 12.4% payroll tax, which is split between the employer and employee (4).
Many older Americans rely on Social Security in retirement — in some cases, it may be their sole source of income. In a Gallup report, 58% of retired Americans said Social Security is a “major source” of their retirement income (5).
For those who have yet to retire, Allianz’s 2025 Annual Retirement Study found that 62% of Americans aren’t saving as much for retirement as they’d like, while 64% worry more about running out of money than death. Inflation is a major cause of that worry, but 43% also worry that Social Security won’t provide as much financial support as they’ll need (6).
So, how dire is the state of Social Security? Insolvency doesn’t mean your benefits will disappear altogether, it simply means the program’s trust funds have been depleted. But since the program is paid for with ongoing tax income, Social Security will still exist — there just won’t be enough tax dollars coming in to cover the current benefits going out.
In other words, older Americans would receive a reduced benefit. The trustees report estimates that, unless something changes, retirees will receive 77% of their full benefit when the retirement trust fund is depleted (1). Those collecting disability benefits will receive 81% of their full benefit.
There are a number of reforms that could help fill those coffers, but the clock is ticking. Many of these reforms are unpopular, such as raising the retirement age, raising payroll taxes, raising the payroll tax cap and using price indexing instead of wage indexing to calculate benefits.
But certain reforms — such as raising the full retirement age (FRA) or altering benefit formulas — would have financial consequences for younger workers and future retirees.
For example, one of the simplest reforms would be to increase payroll tax by about three to four percentage points from the current rate of 12.4%, which would “go far toward eliminating the long-term shortfall,” according to Bloomberg’s editorial board (3). However, Americans in the lowest income bracket would be hit hardest, reducing their take-home pay at a time when many already feel squeezed.
Another one of these potential reforms would be raising the FRA from 67 to 69, which the Bloomberg editors say would “close about a third of the shortfall over 75 years.” Americans would work longer before retiring, pay more taxes during that time (boosting program revenue) and claim their benefit later (receiving monthly checks for fewer years).
Once again, this could hit lower-income workers hardest, since they tend to have shorter lifespans than wealthy Americans (7). It could also impact workers in physically demanding jobs who may not be able to keep working, yet don’t qualify for disability.
Other alternatives include increasing the maximum amount of earnings subject to the tax — for 2026, it’s capped at $184,500 (8) — and doing a means-testing for higher earners. Blending “milder variants” of all of these reforms “would make each change less disruptive and, with luck, more feasible,” according to the Bloomberg editors.
These potential reforms could have an impact on both your paycheck or future retirement plans. But, without reform, you could see a reduction in your future Social Security retirement benefit. To date, no legislation has been enacted to address the funding shortfall.
No matter what happens, it’s a good time to take charge of your retirement savings and plan for a range of outcomes, including a smaller Social Security check. For example, the average Social Security check is about $2,002.39 (9), which means a 77% cut would leave you with a $1,542 check.
From the get-go, Social Security was designed to supplement — not replace — individual retirement savings, and it was conceived at a time when American life expectancies were much shorter.
“Social Security was never meant to fund 30 years of retirement, so it makes sense that the full retirement age increases with time,” Eric Ludwig, program director for the Retirement Income Certified Professional Program at the American College of Financial Services, told Kiplinger (10).
But Ludwig also notes that this would unfairly impact Americans working in physically taxing jobs. If they’re physically unable to keep working an extra two years, it could mean adjusting their retirement plans or finding another way to fund the shortfall.
So, amid all this Social Security uncertainty, you may want to focus on your own savings instead: maximizing tax-advantaged accounts such as 401(k)s and IRAs, using catch-up contributions if you’re over 50, and building a diverse investment portfolio.
It also means saving consistently — and as early as possible, so you can benefit from the power of compounding. You may want to consult with a financial advisor to model various scenarios.
While workers who’ve paid into the program can hope for the best, it also pays off to prepare for a variety of outcomes. It’s a good idea to increase personal savings where possible, and be realistic about how tomorrow’s benefits may differ from today’s promises.
A financial advisor can help you figure out how much you’ll actually need to retire comfortably and build a plan that doesn’t depend on Social Security alone. They can also point out any gap between what your benefits should cover and what your lifestyle will cost, so you’re prepared to save up enough to make up the difference.
With Vanguard, you can connect with a personal advisor who can help assess how you’re doing so far and make sure you’ve got the right portfolio to meet your goals on time.
Vanguard’s hybrid advisory system combines advice from professional advisers and automated portfolio management to make sure your investments are working to achieve your financial goals.
And because they’re fiduciaries, they don’t earn commissions — so you can trust the advice you’re receiving is unbiased.
If you’ve identified a shortfall in the savings you’ll need for retirement, you’ll want to boost your portfolio holdings to help bridge the gap.
One way to do that is to add some safe-haven assets — like gold — which can help your nest egg grow over time while cushioning it against market swings.
Gold has long been perceived as a hedge against volatility. This played out in 2025, when investors flocked to the precious metal amid increasing market fluctuations and economic uncertainty. In fact, gold has been one of the best-performing assets over the last year, with prices surging by nearly 75% (11).
Opening a gold IRA with the help of Goldco allows you to invest directly in physical precious metals — while benefiting from the tax advantages of an IRA.
As Dave Ramsey pointed out in a Facebook post, “Time matters more than timing (12).” The longer you’re invested, the stronger your retirement account will look, since time in the market allows compound interest to work its magic.
Ramsey noted that investing $200 each month in your 20s can lead to a sizable $2.3 million nest egg during retirement — but that number shrinks to just $700,000 if you start at 30.
Consistently investing in a low-cost index fund can compound your wealth over time, but if you’re unsure where to begin, Acorns can help.
Acorns makes investing easy by automatically rounding up your expenses to the nearest dollar and investing the difference. So if your morning coffee is $3.25, Acorns will bump it up to $4, turning that coffee into a $0.75 investment in your future.
Over time, that number adds up. Consider that just $25 worth of round-ups each week over 20 years could turn into $78,000, assuming it compounds at 10% annually. And that return isn’t improbable — the S&P 500 index’s annual returns have averaged 10.54% since inception in 1957 (13).
Social Security Administration (1), (8); Committee for a Responsible Federal Budget (2); Bloomberg (3); Pew Research Center (4); Gallup (5); Allianz (6); U.S. Senate Committee on Health, Education, Labor & Pensions (7); Experian (9); Kiplinger (10); Apmex (11); Dave Ramsey, Facebook (12); Investopedia (13)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
