For most retirees, Social Security is more than just a monthly check. Even though the average Social Security check in 2025 is a modest $1,976 per month for retired workers, it represents a financial foundation that many beneficiaries would struggle to live without.
For 23 consecutive years (2002 through 2024), Gallup has surveyed retirees to gauge the importance of their Social Security payout. All 23 polls have found that Social Security income is necessary, in some capacity, to make ends meet for 80% to 90% of respondents.
President Trump signing paperwork in the Oval Office. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.
In spite of Social Security's undeniable importance, this vital program's own financial foundation is crumbling. Both current and future retirees are counting on their elected officials -- including incoming President Donald Trump -- to strengthen Social Security.
With Trump preparing to be sworn in for his nonconsecutive second term in two days (Jan. 20), here are 10 things you need to know about America's leading retirement program and the president-elect.
1. Social Security isn't going bankrupt, but is in trouble
To begin with, Social Security is in financial trouble, but it's not going bankrupt and has no chance of insolvency.
Social Security generates income in three ways:
- The 12.4% payroll tax on earned income (wages and salary, but not investment income)
- The interest income earned on its asset reserves.
- The taxation of Social Security benefits.
As long as workers continue to pay their taxes, the payroll tax ensures there will be money to disburse to eligible beneficiaries. Based on how the program is currently set up, bankruptcy is impossible.
What is at risk is the existing payout schedule, including cost-of-living adjustments (COLAs), over the long term (i.e., the next 75 years).
2. There's a $23.2 trillion (and growing) long-term funding shortfall
For 85 years, the Social Security Board of Trustees has released an annual report highlighting the program's annual income and outlays. More importantly, this yearly report takes into account changes in fiscal and monetary policy, as well as demographic shifts, to forecast how financially sound Social Security is over the long term.
Since 1985, every Trustees Report has warned of a long-term funding obligation shortfall. In the 2024 report, the Trustees estimate a $23.2 trillion cash shortfall through 2098, which is $800 billion more than the estimated deficit in the 2023 Trustees Report.
3. Sweeping benefit cuts of up to 21% are an estimated eight years away
Though Social Security's long-term funding shortfall is an eye-opening number, the more immediate concern is the expected depletion of the Old-Age and Survivors Insurance Trust Fund's (OASI) asset reserves by 2033. The OASI's asset reserves represent the excess capital built up since inception, which is invested in special-issue, interest-bearing government bonds, as required by law.
The OASI closed out 2023 with $2.641 trillion in its asset reserves. If the OASI's asset reserves were to be exhausted, retired workers and survivor beneficiaries could see sweeping benefit cuts of up to 21% in eight years.
The OASI's asset reserves are forecast to be exhausted by 2033. US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.
4. Ongoing demographic shifts are primarily to blame for Social Security's financial woes
If you're looking to point the finger of blame for Social Security's deteriorating financial foundation, it can be said with certainty that it has nothing to do with "congressional theft" or "undocumented workers receiving benefits." Though these are two common online scapegoats for Social Security's worsening financial situation, they're both patently false.
Rather, ongoing demographic shifts are to blame. These include (but aren't limited to):
- A 58% decline in legal migration into the U.S. over a quarter of a century.
- Rising income inequality.
- A historically low U.S. birth rate.
5. Trump understands the ramifications of changing Social Security
Like most elected officials, Donald Trump recognizes that Social Security is vital to the financial well-being of our nation's retirees. But he's not oblivious to the fact that altering Social Security comes with potentially negative ramifications. While speaking at the Conservative Political Action Conference in March 2013, Trump said:
As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid, and Social Security in any substantial way, and at the same time think you are going to win elections, it just really is not going to happen.
In other words, reforming Social Security is going to make some groups of people worse off than they were before.
6. The president-elect's views on Social Security have changed in a big way
Something else to understand about President-elect Trump is that his vision for Social Security has changed immensely over the years. Many moons ago, in January of 2000, Trump detailed a plan to partially privatize Social Security in his book, The America We Deserve:
The solution to the Great Social Security crisis couldn't be more obvious. Allow every American to dedicate some portion of their payroll taxes to a personal Social Security account that they could own and invest in stocks and bonds.
Although efforts to partially privatize Social Security fell flat during George W. Bush's presidency, it nevertheless demonstrates that Trump is willing to shift his approach to strengthening Social Security.
Image source: Getty Images.
7. Trump is a big fan of operating efficiency
Like his predecessors, the incoming president has taken a predominantly hands-off approach to Social Security. In a December 2024 interview with Meet the Press, Trump retorted to the possibility of cutting benefits by saying, "We're not touching Social Security, other than we make it more efficient."
However, making cuts for the sake of operating efficiency is precisely what Donald Trump proposed every year during his first term in the White House. With a focus on making Social Security's Disability Insurance Trust Fund more efficient, four consecutive years of White House budget proposals projected total savings for the Social Security program of:
- $72 billion from fiscal 2018 through fiscal 2027 (the fiscal year ends Sept. 30).
- $64 billion from fiscal 2019 through fiscal 2028.
- $26 billion from fiscal 2020 through fiscal 2029.
- $24 billion from fiscal 2021 through fiscal 2030.
8. He's intimated that the taxation of benefits should be eliminated
But if there's one change President-elect Trump has strongly hinted at, it's doing away with America's most hated tax. In a post on social media platform Truth Social in late July, Trump wrote, "Seniors should not pay tax on Social Security."
Beginning in 1984, up to 50% of benefits could be exposed to the federal tax rate if provisional income (adjusted gross income + tax-free interest + one-half of benefits) surpassed $25,000 for single filers and $32,000 for couples filing jointly. In 1993, a second tax tier was added that exposes up to 85% of benefits to federal taxation if provisional income crests $34,000 for single filers and $44,000 for jointly filing couples.
Though these two tax tiers were implemented roughly 30 and 40 years ago, they've never been adjusted for inflation. Therefore, more senior households have been exposed to this tax over time as COLAs have increased nominal benefits.
Income from the taxation of Social Security benefits is growing in importance. US Old-Age, Survivors, and Disability Insurance Trust Fund Income from Taxation of Benefits Receipts data by YCharts.
9. Donald Trump's Social Security proposals come with unintended consequences
While incoming President Donald Trump's proposals are well-intentioned, they would also come with unintended consequences.
As an example, ending the taxation of Social Security benefits would increase monthly checks for around half of all retired workers. However, it would also remove an estimated $943.9 billion in collectible income for Social Security over 10 years and likely expedite the OASI's asset reserve depletion timeline. Considering that Social Security is staring down a $23.2 trillion (and growing) long-term funding deficit, doing away with one of its three sources of funding wouldn't be a fiscally prudent move.
Taking a hands-off approach doesn't help, either. While kicking the can is unlikely to anger future voters, it would keep the OASI's asset reserves on track for exhaustion in eight years.
10. The status quo is likely to continue
The final thing you should know about Donald Trump and Social Security is that the status quo is expected to continue.
Aside from the unintended consequences of Trump's proposals, 60 votes are needed in the Senate to amend the Social Security Act. The last time either party held a supermajority of seats (60) in the upper house was in 1979.
Even with Republicans controlling both houses of Congress, Social Security reform would require bipartisan cooperation in the Senate, which has been virtually nonexistent for decades.
