Last year was a history-maker for Social Security. In addition to celebrating the 90th anniversary since the Social Security Act was signed into law (August 1935), the average monthly retired-worker benefit surpassed $2,000 for the first time since the program's inception.
While an average monthly check of $2,071.30, as of December 2025, is a relatively modest payout, it's nonetheless imperative to help retirees cover their expenses. According to national pollster Gallup, 24 years of annual surveys show that 80% to 90% of retirees rely on their monthly Social Security income to cover at least some portion of their expenses.
Maintaining the financial health and longevity of Social Security should be of the utmost importance for our elected officials. But based on updated analyses, the financial foundation of America's leading retirement program is crumbling -- and President Donald Trump is at least partly to blame.
President Trump delivering remarks. Image source: Official White House Photo by Andrea Hanks, courtesy of the National Archives.
The prospect of sweeping Social Security benefit cuts is creeping closer
Every year since the first retired-worker benefit check was mailed in January 1940, the Social Security Board of Trustees has published a report detailing the program's current financial health. This report allows the public to track precisely how Social Security generates income and where those dollars end up.
More importantly, the Social Security Trustees Report makes forward-looking projections as to the long-term solvency of America's leading retirement program.
On the one hand, Social Security is absolutely no danger of bankruptcy, insolvency, or halting benefit checks. It generates more than 91% of its annual income from the 12.4% payroll tax on earned income (wages and salaries, but not investment income). As long as workers continue paying their taxes, there will always be income to disburse to eligible beneficiaries.
However, maintaining the existing payout schedule, inclusive of near-annual cost-of-living adjustments (COLAs), is far from a given.
According to the 2025 Trustees Report, which was released in mid-June of last year, the program faces $25.1 trillion in unfunded long-term obligations. In this instance, the "long-term" refers to the 75 years following the release of a report.
Perhaps more worrisome is the forecast for the Old-Age and Survivors Insurance trust fund (OASI), which doles out payments to 53.6 million retired workers and 5.8 million survivor beneficiaries each month. The latest Trustees Report estimates the OASI's asset reserves -- the excess income collected since inception that's invested in special-issue, interest-bearing government bonds -- will be exhausted by 2033.
Although the OASI doesn't need a dime in its asset reserves to continue making payments, the absence of these reserves would indicate that the existing payout schedule, including COLAs, isn't sustainable. The Trustees believe a 23% sweeping benefit cut may be necessary by 2033 to sustain OASI recipients' payouts through 2099.
President Trump's "big, beautiful bill" makes things worse for Social Security
However, Social Security's prospects have soured further since the release of the Trustees Report last June, with President Trump's flagship tax and spending law, the "big, beautiful bill," receiving the blame.
Before Donald Trump was elected to his second, non-consecutive term, and in the months leading up to the July 4 signing of his mega-bill, he'd promised to do away with the most-hated aspect of Social Security: the taxation of benefits.
JUST IN: Trump says, "Seniors should not pay tax on social security." pic.twitter.com/qrOX2wZJXc
-- Simon Ateba (@simonateba) July 31, 2024
Beginning in 1984, individuals and couples filing jointly with provisional income (adjusted gross income + tax-free interest + one-half of Social Security benefits) above $25,000 and $32,000, respectively, could have up to 50% of their benefits exposed to federal taxation. Roughly a decade later, a second tax tier was added, allowing up to 85% of benefits to be taxed at the federal rate when provisional income topped $34,000 for individuals and $44,000 for those filing jointly.
What makes this tax so disliked is that these qualifying income thresholds have never been adjusted for inflation. A tax that applied to approximately 10% of senior households in the mid-1980s now affects roughly half of all senior households.
Unfortunately, Trump wasn't able to muster bipartisan support for the measure, which would have been necessary to amend the Social Security Act. Instead, the "big, beautiful bill" passed along a consolation prize for seniors, along with other tax breaks for select workers.
Trump's new law provides qualifying seniors with a $6,000 boost to their standard federal tax deduction ($12,000 for couples filing jointly) from tax years 2025 through 2028. It also allows select workers to deduct some of their overtime pay and/or tips received from 2025 through 2028.
While almost everyone enjoys keeping more of their income or Social Security benefits, these tax breaks are going to adversely affect the income Social Security collects through 2028.
In response to a request from Sen. Ron Wyden (D-OR) to estimate the financial impact of the "big, beautiful bill" on Social Security, the Social Security Administration's (SSA) Office of the Actuary projected an increase in costs of $168.6 billion for the combined OASI and Disability Insurance trust fund from calendar years 2025 through 2034.
More importantly, it accelerates the expected depletion date of the OASI's asset reserves from the first quarter of 2033 to the fourth quarter of 2032. In other words, projected sweeping benefit cuts for the OASI are now just six years away.
Image source: Getty Images.
Ongoing demographic shifts are a much bigger issue for Social Security
While President Trump's flagship tax and spending law is expected to have a deleterious effect on America's top retirement program, it's playing a comparatively small role in Social Security's weakening financial foundation. Instead, ongoing demographic shifts are a much bigger issue.
You're likely familiar with some of these changes, such as the ongoing retirement of baby boomers and the increase in life expectancy since Social Security benefits were first doled out in January 1940. Social Security was never designed to pay retired workers for multiple decades.
But it's the demographic shifts that aren't front-and-center that have, arguably, been the most problematic.
For example, the U.S. fertility rate hit an all-time low in 2024, according to data from the Centers for Disease Control and Prevention. For a generation to replace itself, each woman would need to have an average of 2.1 children. In 2024, fewer than 1.6 children were being born per woman. A significant dip in births will provide added pressure to the worker-to-beneficiary ratio in the decades to come.
Additionally, net legal immigration into the U.S. has declined since the late 1990s. America's leading retirement program relies on a steady stream of legal migrants. Since migrants are typically young, they'll often spend decades in the labor force contributing via the 12.4% payroll tax. Fewer legal migrants entering the U.S. means less in the way of payroll tax income for Social Security.
There's also an income inequality problem that's plaguing the program. In 1983, approximately 90% of all earned income was subject to the payroll tax. But as of 2024, the payroll tax applied to only around 83% of earnings, according to the SSA's Fast Facts and Figures report from 2025. This indicates that earnings have been growing faster than the tax cap (in 2026, all earned income up to $184,500 is subject to the payroll tax), thereby allowing more of it to escape the payroll tax.
There aren't any easy fixes to these demographic shifts, which makes strengthening Social Security for future generations a true challenge.
