In February, more than 52 million retired-worker beneficiaries took home an average Social Security check of $1,980.86. While this is a relatively modest payout, it nevertheless keeps more people out of poverty than any other government program.
According to an analysis from the Center on Budget and Policy Priorities, Social Security lifted 22 million people above the federal poverty line in 2023, 16.3 million of whom were aged 65 and over.
Additionally, 23 consecutive years of surveys from national pollster Gallup have shown that 80% to 90% of retirees, including 88% in April 2024, require their Social Security check to cover at least some portion of their expenses.
Ensuring the financial stability of Social Security should be a top-of-the-list item for our elected officials. But according to a recent statement from Sen. Tommy Tuberville (R-AL), America's leading retirement program could "blow up."
Is Social Security on the verge of "blowing up?" Let's walk through how the program came to be where it is today and address the tough question(s) about Social Security's future.
Image source: Getty Images.
Social Security is staring down a $23 trillion long-term funding obligation shortfall
In each of the previous 85 years -- i.e., since the first retired-worker benefit check was mailed -- the Social Security Board of Trustees has released an annual report intricately detailing how the program generates income and where those dollars are spent. It's akin to examining a public company's balance sheet.
More importantly, the annual Trustees Report offers forecasts about the financial solvency of Social Security looking 75 years into the future (the "long term"). These projections are based on a number of factors, including changes to fiscal and monetary policy, as well as a host of demographic shifts.
Every Trustees Report since 1985 has cautioned of a long-term unfunded obligation. The Trustees estimate that income collected in the 75 years following the release of a report will be insufficient to cover outlays, which primarily means benefits, but also includes the administrative expenses to run the Social Security program. In the 2024 Trustees Report, Social Security's long-term funding obligation shortfall reached $23.2 trillion.
Even more worrisome, the Trustees are forecasting an exhaustion of the Old-Age and Survivors Insurance Trust Fund's (OASI) asset reserves by 2033. The OASI's asset reserves represent the excess cash built up since the program's inception, which is, by law, currently invested in special-issue, interest-bearing government bonds.
While some people on social media are quick to blame "Congressional theft" or "undocumented migrants" for Social Security's woes, these scapegoats have conclusively proven to be myths. The lion's share of Social Security's worsening financial outlook can be traced to ongoing demographic shifts, including (but not limited to):
- A historically low U.S. birth rate, which will eventually weigh on the worker-to beneficiary ratio.
- Rising income inequality, with a higher percentage of earned income escaping the 12.4% payroll tax.
- A near-halving in net legal migration into the U.S. since 1998. A healthy level of legal migration is a necessity for Social Security's long-term success.
The OASI's asset reserves are forecast to be depleted by 2033. US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.
Is Social Security going to blow up?
With a better understanding of the short- and long-term challenges America's leading social program is contending with, let's circle back to the question at hand: Is Social Security going to blow up?
The answer is a very resounding no -- but this doesn't mean the existing payout schedule is safe, either.
Social Security has three funding sources (listed in order of importance by percentage of income generated annually):
- The 12.4% payroll tax on earned income (wages and salary, but not investment income).
- Interest income earned on its asset reserves.
- The taxation of Social Security benefits.
If the OASI's asset reserves were to be depleted in eight years, as is currently forecast, the program's second source of funding would pretty much disappear.
However, the payroll tax on earned income, which accounted for more than 91% of the approximately $1.351 trillion in income collected in 2023, isn't going anywhere. The only way to adjust the payroll tax would be to amend the Social Security Act, which would require 60 votes in the Senate. Neither Democrats nor Republicans want to risk altering Social Security's core funding mechanism.
In other words, as long as the 12.4% payroll tax remains in place and Americans keep working, there's absolutely no way Social Security can ever go bankrupt, become insolvent, or blow up. There will always be money flowing into the program for disbursement to eligible beneficiaries.
However, there's no guarantee the payout retirees are currently receiving, or that future retirees expect to receive, will be sustained, inclusive of cost-of-living adjustments (COLAs), beyond 2033. The Trustees are projecting that retired workers and survivor beneficiaries could see their Social Security checks slashed by 21% if the OASI's asset reserves are exhausted in 2033. This assumption would remove the need for additional benefit cuts through 2098.
If you qualify for a retirement benefit, Social Security will absolutely be there for you. What remains to be seen is if the existing payout schedule, including COLAs, can be sustained beyond 2033, or if some level of sweeping cuts will be needed.
Image source: Getty Images.
Solutions to strengthen Social Security exist, but there's little in the way of cooperation on Capitol Hill
Beyond ongoing demographic shifts, inaction by lawmakers on Capitol Hill deserves some degree of blame for Social Security's worsening financial outlook. While both parties have offered proposals to strengthen the program, neither has ceded an inch to its opposition to find a common-ground solution.
Most Democrats in Washington, D.C., prefer tackling Social Security's deficiencies by adjusting the payroll tax cap on high earners. In 2025, all wages and salary from $0.01 to $176,100 are subject to the payroll tax, while earned income above $176,100 (the earnings cap) is exempt. Reinstating this cap at a higher level, or removing it altogether, would generate instant income for Social Security.
Republicans generally favor reducing long-term outlays by gradually raising the full retirement age. Currently, anyone born in or after 1960 can initially claim their retired-worker benefit at 67 and receive 100% of what they're due per month. Various GOP proposals have suggested gradually increasing the full retirement age, which would require future retirees to either wait longer to collect 100% of their monthly payout, or to accept a steeper permanent reduction if claiming early.
Though both of these unilateral approaches would strengthen Social Security, they also have deficiencies. For example, the GOP approach to reduce long-term outlays would take decades to recognize cost-savings. This does nothing to thwart the expected depletion of the OASI's asset reserves in eight years.
Meanwhile, the Democrats' plan to increase payroll taxation on the well-to-do would likely result in high earners shifting their income streams, which would mean less income collected than initially anticipated. What's more, taxing high earners won't close Social Security's $23.2 trillion long-term funding shortfall.
The other issue for lawmakers, which was alluded to earlier, is that 60 votes are needed in the upper house of Congress to amend the Social Security Act. Since neither party has held a supermajority of seats (60) in the Senate in 46 years, bipartisan cooperation is going to be necessary for changes to be enacted.
Taking the core proposals from Democrats and Republicans and putting them to work in a single proposal, similar to the Social Security Amendments of 1983, would offer Social Security its best chance of long-term success. But until a middle-ground solution can be found, uncertainty and worry about potential retired-worker benefit cuts in eight years will remain the headline story.
