In April, nearly 52.6 million retired workers brought home an average Social Security check totaling $1,999.97. While a $2,000 monthly check might not sound like a lot of money, no social program has consistently played a more vital role in pulling seniors above the federal poverty line and helping them make ends meet than Social Security.

There's just one problem: This nearly 90-year-old program's financial foundation is crumbling.

Current and future retirees are counting on their elected officials -- including President Donald Trump -- to strengthen Social Security and avoid the prospect of sweeping benefit cuts, which are drawing closer. However, not every proposal to improve Social Security will yield a desired result.

President Donald Trump speaking with reporters in the Oval Office. Image source: Official White House Photo.

Social Security benefit cuts are estimated to be eight years away

In January 1940, the very first retired-worker benefit check was paid from Social Security's coffers. Every year since this first payment was doled out, the Social Security Board of Trustees has published an annual report that details in length how the program generates income and where those dollars end up.

More importantly, these annual Trustees Reports analyze fiscal and monetary policy shifts, along with ongoing demographic changes, to make educated projections about the financial health of Social Security when looking 75 years into the future (what the Trustees refer to as the "long term").

Beginning in 1985, every Trustees Report has warned of a long-term unfunded obligation. In simpler terms, the Trustees projected what Social Security would collect in income in the 75 years following the release of a report and estimated that outlays (benefits + administrative expenses to operate the Social Security program) would outpace income.

In the 2024 Trustees Report, this long-term funding deficit had ballooned to $23.2 trillion. While online myths often blame government theft or undocumented migrants for Social Security's woes, it's significant demographic shifts -- rising income inequality, lower birth rates, and a meaningful decline in net legal migration in the U.S. -- that are the real culprits.

Though $23.2 trillion is an eye-popping figure, it's not the one that should have beneficiaries most concerned. Rather, the most worrisome of all projections is that the Old-Age and Survivors Insurance Trust Fund (OASI) will exhaust its asset reserves by 2033.

The OASI's asset reserves represent the excess income collected since inception that hasn't been paid out in benefits (or administrative expenses). Social Security's asset reserves are invested in special-issue, interest-bearing government bonds, as required by law.

The good news for the OASI is that it doesn't need a cent in asset reserves to keep paying benefits. More than 91% of Social Security's income is collected from the 12.4% payroll tax on earned income. Thus, there's no concern about Social Security going bankrupt or stopping benefit payments.

However, the existing payout schedule, including annual cost-of-living adjustments (COLAs), is at risk of major disruption in 2033. Without reform, the Trustees anticipate that retired workers and survivor beneficiaries will see their Social Security checks slashed by up to 21% in eight years.

The OASI's asset reserves are forecast to run out by 2033. U.S. Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.

President Trump has proposed a foundational change to Social Security

During the first 100 days of Donald Trump's nonconsecutive second term, he's overseen a flurry of Social Security changes. The most publicized one has been his creation of the Department of Government Efficiency (DOGE), which aims to make the U.S. federal government more efficient. In the wake of DOGE's creation, the Social Security Administration announced plans to reduce its staff by 7,000 to 50,000, as well as close some of its physical offices.

Attempting to make Social Security a more efficient program by trimming administrative costs is nothing new for Trump. All four of the president's annual budget proposals during his first term (Jan. 20, 2017 – Jan. 20, 2021) called for modest outlay reductions over a 10-year period.

But President Trump's sweeping Social Security proposal has nothing to do with cutting benefits. Rather, it has to do with eliminating a hated aspect of the program that results in reduced benefits.

.@POTUS: "In the coming weeks and months, we will pass the largest tax cuts in American History--and that will include No Tax on Tips, NO Tax on Social Security, and No Tax on Overtime. It's called the one big beautiful bill..." pic.twitter.com/SRwaWoY9gZ

-- Rapid Response 47 (@RapidResponse47) April 29, 2025

In a social media post to Truth Social on July 31, then-candidate Donald Trump stated, "Seniors should not pay tax on Social Security." In a recent town hall meeting, the president doubled down on his desire to end the tax on Social Security benefits.

Beginning in 1984, up to 50% of Social Security 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 a single filer and $32,000 for couples filing jointly. A decade later, a second tier was added that allows up to 85% of benefits to be taxed at the federal rate if provisional income tops $34,000 for single filers and $44,000 for couples filing jointly.

The reason the tax on Social Security benefits is so disliked is because these income thresholds haven't been adjusted for inflation since their introduction decades ago. A tax that was only expected to impact around 10% of all senior households in the mid-1980s is now applicable to around half of all senior households. Not surprisingly, an informal poll in 2023 by nonpartisan senior advocacy group The Senior Citizens League found that 94% of respondents didn't believe Social Security income should be taxed.

Eliminating this tax would increase net benefits for about half of all retired-worker beneficiaries -- but it would also have undesirable consequences for Social Security.

Image source: Getty Images.

Trump's proposal to improve Social Security would significantly worsen its outlook

A proposal to remove the tax on Social Security benefits would have overwhelming support from retirees currently receiving benefits and likely garner plenty of support from future beneficiaries. But moving forward with such a proposal would have deleterious effects on Social Security's financial health.

In 2023, Social Security collected a little over $1.35 trillion in income. Though an aforementioned 91% came from the 12.4% payroll tax on earned income (applicable up to $176,100 in 2025), the remainder traces back to the interest income earned on the program's asset reserves, as well as the taxation of benefits.

With the OASI's asset reserves shrinking with each passing year due to demographic shifts, interest income will be a less-meaningful income source over time. Meanwhile, the importance of taxing benefits as a source of Social Security income has only grown over time.

The income generated from taxing Social Security benefits has increased significantly over four decades. U.S. Old-Age, Survivors, and Disability Insurance Trust Fund Income from Taxation of Benefits Receipts data by YCharts.

If the tax on benefits is eliminated, the 2024 Trustees Report estimates that $943.9 billion in income would be lost from 2024 through 2033. This would almost certainly speed up the timeline to the OASI's asset reserve depletion date, as well as potentially increase the percentage that benefits would need to be cut (beyond the estimated 21%) to sustain payouts through 2098 without any further reductions.

Perhaps the saving grace for Social Security's financial health is that President Trump can't amend the program through an executive order. Amending the Social Security Act requires 60 votes in the upper house of Congress. The thing is, neither Democrats nor Republicans have held a supermajority of seats (60) in the Senate since 1979, so any major overhauls to Social Security will require bipartisan support.

Although ending the tax on benefits is wildly popular with seniors, it's fiscally irresponsible and would further cripple an already struggling program. It's highly unlikely the president will find any support from Democrats in the Senate, and it's not even clear if all 53 GOP senators would support such a proposal.

Despite all the hoopla surrounding Trump's popular proposal, it has almost no chance of being enacted.