Receiving a Social Security check monthly during retirement isn’t a luxury. For most retirees, this monthly benefit is a necessity to cover their expenses.
In each of the previous 23 years, national pollster Gallup has conducted a survey to gauge how reliant retirees are on the income they receive from America’s leading social program. Consistently, 80% to 90% of retirees -- including 88% in April 2024 -- responded that Social Security represents a “major” or “minor” income source. In other words, it’s foundational, in some capacity, to make ends meet.
Although strengthening Social Security should be at the top of the list for every elected official in Washington, D.C., including President Donald Trump, this vital program has been weakening for decades. While the president has repeatedly noted that he has no intention of cutting Social Security, this looks to be a promise he’s set to break, by his own admission.
President Trump speaking with reporters. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.
Social Security benefit cuts are an estimated eight years away
But before digging into anything having to do with policy, it’s imperative to understand how America’s leading retirement program got to where it is now.
Ever since the first retired-worker benefit check was mailed in January 1940, the Social Security Board of Trustees has released an annual report that highlights how every dollar in income has been generated, as well as tracks how those dollars are spent. These reports also provide estimates about the financial outlook for Social Security by taking into account changes in fiscal and monetary policy, as well as various demographic shifts.
For the last 40 years, every Trustees Report has cautioned of a long-term (75-year) unfunded obligation. This is to say that, inclusive of cost-of-living adjustments (COLAs), projected income collected in the 75 years following the release of a report would be insufficient to cover 75 years’ worth of outlays -- “outlays” primarily refers to benefits paid, but also includes the administrative expenses to keep Social Security running. In 2024, this long-term funding obligation shortfall stood at $23.2 trillion, and it’s been rapidly growing.
The more immediate issue is the forecast depletion of the asset reserves for the Old-Age and Survivors Insurance Trust Fund (OASI). To be clear, exhausting the OASI’s asset reserves doesn’t mean bankruptcy or the end of payments to retired workers and survivor beneficiaries. Rather, it’s a sign that the existing payout schedule, including COLAs, isn’t sustainable.
The 2024 Trustees Report predicts the OASI will exhaust its asset reserves by 2033, which, if not remedied, will lead to sweeping benefit cuts of as much as 21%.
The OASI's asset reserves are forecast to be gone by 2033. US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.
President Trump promised no Social Security cuts -- which isn’t entirely accurate
Most lawmakers tend to avoid taking a firm stance on Social Security. Even though elected officials are aware of the long-term funding issues for America’s leading retirement program, they also understand that making changes to this age-old program would result in some group of people being worse off than they were before. In other words, sweeping Social Security’s problems under the rug is the safest move from the perspective of not wanting to anger voters.
However, presidential candidates and sitting presidents rarely have the luxury of sweeping key issues under the rug. When questioned about his intentions prior to November, then-presidential candidate Donald Trump repeatedly vowed he wouldn’t cut Social Security.
Although Trump reiterated this take following his November victory, his promise not to cut Social Security wasn’t entirely accurate. In a December interview with Meet the Press, the president laid out his thesis in 16 words:
I said to people we’re not touching Social Security, other than we make it more efficient.
In other words, President Trump has no intention of implementing sweeping benefit cuts, but a wide range of efficiency-based reforms, which are designed to reduce outlays, are firmly on the table. By definition, this breaks the president’s campaign promise not to cut Social Security.
However, the president angling for efficiency-based reductions shouldn’t come as a surprise. During Donald Trump’s first term in the White House, all four of his presidential budgets called for efficiency-based cuts to America’s leading social program. Over 10 years, these reductions were designed to reduce Social Security’s outlays by a range of $24 billion to $72 billion, spanning all four budget proposals.
For example, President Trump repeatedly called for retroactive benefits for workers with disabilities to be halved to six months from its current 12 months. Proposals similar to this, coupled with administrative cost reductions -- e.g., Social Security Administration (SSA) job cuts and fewer physical office leases -- are how the president will attempt to strengthen Social Security without effecting sweeping changes to retired-worker benefits.
Image source: Getty Images.
Trump’s broken Social Security promise won’t fix what ails this vital program
On paper, the prospect of $24 billion to $72 billion in estimated cost-savings over the course of a decade probably sounds great. But if you widen the lens and look at the bigger picture, you’d see that Trump’s efficiency-based cuts are the equivalent of placing a Band-Aid on a broken leg.
Based on the intermediate (i.e., most-likely to happen) cost model from the 2024 Trustees Report, cumulative costs for Social Security from 2024 through 2033 are estimated at $19.09 trillion. During this 10-year period, costs are expected to outpace collected income by almost $2.24 trillion. Reducing the SSA’s workforce, shuttering some offices, and enacting very modest efficiency-based reforms, aren’t going to make a dent into the OASI’s upcoming asset reserve depletion date or the 75-year funding obligation shortfall.
The grim reality for President Trump, along with every other elected official on Capitol Hill, is that strengthening Social Security will require tough decisions that might make voters unhappy.
For instance, increasing or removing the taxable earnings cap, which is a proposal supported by most Democrats in Congress, would provide an immediate income boost and delay the OASI’s asset reserve depletion date. However, taxing the rich, by itself, doesn’t come close to fixing the program’s long-term funding shortfall. To boot, high earners would likely shift how they generate income to reduce their payroll tax liability.
Conversely, increasing the full retirement age or implementing other efficiency-based measures would be effective at reducing outlays, but would also fall short of rectifying the long-term funding shortfall. The problem with the Republican approach is that it does nothing to address the OASI’s imminent exhaustion of its asset reserves.
The most-effective solutions involve cooperation. The last time a sweeping bipartisan overhaul of Social Security was passed in 1983, it extended the OASI’s asset reserve depletion timeline by a half-century (to the estimated 2033 exhaustion).
Tough choices will eventually need to be made. With President Trump set to break his Social Security promise and target efficiency-based reductions, the only question is whether he or a successor will lead the charge to reform Social Security.
