More than 68 million Americans receive Social Security benefits, but their monthly payments could soon diminish.
The latest annual report from the Social Security trustees projects that the Old-Age and Survivors Insurance Trust Fund — which funds retirement benefits — will deplete its reserves by 2033.
At that point, Social Security payroll taxes that workers pay would continue to go into the retirement trust fund, so it wouldn’t run out of money entirely. But it would no longer have enough money to pay all Social Security benefits.
Retirees could face about a 23% cut in their monthly payment, according to projections.
Following is a look at how we got here and what a 23% cut would look like for the average retiree.
The problem
The Social Security retirement trust fund’s costs have been rising faster than its income since 2021, and that trend is projected to continue.
Part of the problem is America’s shifting demographics, like an aging population and lower birth rates.
The number of Social Security recipients has increased, but there aren’t enough workers paying into the program to balance things out.
There were 43 million people aged 65 and older in 2010, but that increased to 59 million people in 2024, according to the Peter G. Peterson Foundation. Consequently, there were 2.9 workers for every Social Security recipient in 2010, but only 2.7 workers per recipient in 2024.
At this point, Congress would have to take action to prevent the Social Security retirement trust fund from exhausting its reserves. Otherwise, millions of current and future retirees would face reduced benefits.
The average retiree
Here’s a look at the current average Social Security payment for different types of recipients — and what it would be after a 23% cut:
- Retired workers: The average Social Security payment among these recipients was $2,005.05 per month as of June. A 23% reduction in that amount would leave them with $1,543.89 per month.
- Spouses of retired workers (i.e., people receiving spousal benefits): Their average payment was $953.33 as of June. A 23% reduction would make it $734.06.
- Nondisabled widows and widowers (i.e., people receiving survivor’s benefits based on their deceased spouse’s earnings record): Their average payment was $1,863.18 as of June. A 23% reduction would make it $1,434.65.
- Children of deceased workers (i.e., children receiving survivor’s benefits based on their deceased parent’s earnings record): Their average payment was $1,138.30 as of June. A 23% reduction would make it $876.49.
Technically, by 2033, Social Security payments would be higher than these current averages due to annual cost-of-living adjustments (COLAs), which are designed to prevent inflation from eroding the purchasing power of retirees’ benefits. However, COLAs and inflation theoretically cancel each other out.
The other Social Security trust fund
The Social Security system has two different trust funds. Besides the Old-Age and Survivors Insurance (OASI) Trust Fund that funds retirement benefits, there’s the Disability Insurance Trust Fund. It funds Social Security disability benefits.
The disability trust fund is in better shape financially. It’s not projected to deplete its reserves for more than 75 years.
To learn more about the financial standing of America’s social programs for retirees, check out “Here’s What Will Happen When Social Security and Medicare Funds Run Dry.”
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