The Social Security tsunami: Payments could be cut by 23%, doubling the poverty rate for America’s seniors
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Understanding the future of Social Security, and the risks to your benefits.
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August 8, 2025
03:17 PM
Fortune
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Personal Finance·Fortune IntelligenceThe Social Security tsunami: Payments could be cut by 23%, doubling the poverty rate for America’s seniorsBy Ashley LutzBy Ashley LutzExecutive Director, Editorial GrowthAshley LutzExecutive Director, Editorial GrowthAshley Lutz is an executive editor at Fortune, overseeing the Success, Well, syndication, and social teams
She was previously an editorial leader at Bankrate, The Points Guy, and Insider, and a reporter at Bloomberg News
Ashley is a graduate of Ohio University's Scripps School of Journalism.SEE FULL BIO The future of Social Security is uncertain.Thurtell/Getty ImagesAs millions of Americans rely on Social Security for their monthly income, new reports indicate the gram’s finances are at a critical juncture
Here’s what every current or soon-to-be recipient should understand the future of Social Security, the risks to your benefits, and what steps Congress could take to keep the gram strong
When will Social Security “run out of money”? The 2025 Social Security Trustees Report finds the gram’s main reserve fund—the Old-Age and Survivors Insurance (OASI) Trust Fund—will be depleted in 2033
That’s just eight years from now
At that point, unless Congress acts, the system will only have enough payroll tax revenue coming in to pay 77% of scheduled benefits—triggering an automatic across-the-board cut of around 23% for all recipients
What does this mean for you?If you’re already receiving or to receive Social Security, a typical monthly benefit check of $2,000 could drop to $1,540 if Congress does not address the funding shortfall.For a dual-earning couple, that could mean losing as much as $18,000 per year in benefits—potentially doubling the poverty rate among America’s seniors
Why is this happening? 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
What needs to happen to prevent cuts? Congress needs to act within the next few years to prevent automatic benefit reductions
Lawmakers have several options—most ly, a combination of them will be required: Raise the payroll tax cap: In 2025, earnings over $176,100 are not taxed for Social Security. posals would have higher earners pay more by lifting or removing this cap
Increase the payroll tax rate: Even a gradual increase above the current 12.4% could address a significant chunk of the gap
Raise the full retirement age: The age for full benefits is already moving to 67 for those born in 1960 or later and will ly go higher for younger generations
Adjust the benefit formula: Lawmakers might change how initial benefits are calculated, perhaps favoring lower-income retirees with higher replacement rates while curbing benefits for high earners
Invest in the : A bipartisan Senate posal seeks to fund a new sovereign wealth fund—essentially part of Social Security’s reserves in stocks and bonds to seek higher returns, but this involves risk and is not a guaranteed fix
Direct federal funding: Some plans call for one-time or federal cash injections, though this would add to the national debt
What should recipients do now? Stay informed: Congress has a long history of fixing Social Security before benefit cuts occur—but there are no guarantees this time
Watch for : Changes to COLA (Cost-of-Living Adjustment), retirement age, and tax rates are possible, but none will affect checks overnight
Consider advocacy: Many organizations representing older Americans are urging Congress to act now to preserve benefits for current and future retirees
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 apximately 23% will occur under current law
Most experts and lawmakers believe a fix is ly, 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
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