Government action will be necessary to address the ongoing funding problem. But in the meantime, Americans must deal with the prospect of reduced Social Security checks in the near future.
So, what can people do to shore up their retirement savings?
How Social Security works
Social Security is largely a pay-as-you-go system, where current workers and their employers pay taxes that fund benefits, with the intention that when workers retire, the following generations will pay into the system to fund their benefits. There are also Social Security trust fund reserves earning interest that can contribute to benefits. Some beneficiaries may pay taxes on part of their benefits as well.
As the population ages, the amount in benefits being paid out is exceeding how much the program takes in. This has been the case since 2021. Approximately 70 million beneficiaries in 2024 drew funds from Social Security, outpacing the taxes and interest being collected.
Current action on Social Security
Shortly before President Joe Biden left office, he signed the Social Security Fairness Act into law. The act unlocked benefits for a number of public workers. Critics of the bipartisan legislation argued the expanded benefits would hasten the depletion of the Social Security trust funds.
In addition, policy proposals made by President Donald Trump during his election campaign came under scrutiny for potentially putting the funds at further risk. These include eliminating taxes on Social Security benefits, ending taxes on tips and overtime, implementing tariffs and mass deportations.
Some of these measures were included in Trump’s One Big Beautiful Bill Act. A letter from the Social Security Administration’s (SSA) Office of the Chief Actuary estimated the bill would increase program costs and accelerate the depletion of the trust funds by several months.
As for the agency itself, early in the year, it was announced the SSA aimed to cut 12% of its staff — approximately 7,000 people — which critics argued would have a negative impact on services.
How you can better prepare for retirement
Social Security retirement benefits are meant to supplement your income, not replace it entirely.
