But for American citizens who have paid into the system for their entire lives?
Posted on 11/30/2025 6:57:04 PM PST by Red Badger
For decades, people have fretted about the financial sustainability of America's bedrock retirement income program. Now, Social Security's precarious fiscal state is an issue for the here and now.
* How to fix it is set to be a defining political fight of the next several years, with millions of Americans' benefits and the fiscal future of the United States at stake.
Why it matters: There is a tug-of-war between the benefits future retirees receive and the taxes that working-age people pay. Something has to give, and surprisingly soon.
The big picture: The Social Security retirement fund is set to be depleted in 2033, at which point recipients would see a steep cut to their monthly checks absent congressional action.
* Nobody in U.S. politics wants that to happen, but there are deep divides over how to address the imbalance — or, perhaps more accurately, elected officials would prefer not to talk about the hard trade-offs ahead.
* Fiscal watchdogs — and the program's own trustees — have warned of its unsustainability for decades, but what is different now is that it is no longer a far-off problem.
Threat level: U.S. Senate candidates in next year's midterms could face the looming insolvency at the end of their terms — putting the issue on the ballot just 11 months from now.
* "This is a tinderbox issue," Gopi Shah Goda, director of the Retirement Security Project at the Brookings Institution, tells Axios. "It's hard to deal with because it's a long-term problem — but that time is coming.
* "It's going to be painful. There's no free lunch. Someone's going to lose out."
By the numbers: If the Social Security retirement fund is depleted in 2033, the program would be able to pay only 77% of scheduled benefits, per the most recent trustees' report.
* The average beneficiary receives $2,008 a month, which implies a drop to $1,546. That's a potentially devastating loss of income for those who depend on the program — and it happens automatically if Congress doesn't intervene.
Zoom in: In some sense, the trust funds are an accounting fiction — they hold Treasury securities, so essentially, money the government owes itself. But legally speaking, it matters; the depletion of the trust funds forces some sort of action.
* The great political question is how exactly to solve this mismatch between the tax revenue that comes in and the benefits scheduled to go out.
Zoom out: This predicament has its roots in massive, long-standing forces.
* The extra-large baby boom generation is now retired or will be soon; the youngest boomers are now 61, the oldest 79.
* Since then, Americans have not had babies at the same rate, so the ratio of working-age people to retirees is in precipitous decline.
* There were 3.4 workers — people earning an income and paying into the system — per Social Security beneficiary at the turn of the 21st century. That's down to about 2.7 now and on track to reach 2.3 in a decade.
Reality check: "We have gone 40 years knowing exactly what was coming for us," said Andrew Biggs, a senior fellow at the American Enterprise Institute. "If you want to know where Social Security is today, read the New York Times from 1990."
* And while the numbers are large — a $350 billion projected shortfall in 2033, the trustees' report projects — that's not an unsolvable problem at about 1.1% of current GDP. Technocrats can sketch out solutions pretty easily.
* The problem is that those solutions are painfully zero-sum and politically unpalatable, with every dollar of benefits maintained for a recipient translating into a tax increase for someone else.
That explains why elected officials have largely ignored the looming problems over the last 15 years, despite simple arithmetic showing that addressing the imbalance in one fell swoop in 2033 will cause more pain than phasing in fixes might.
* "It didn't have to be this way," Maya Macguineas, president of the Committee for a Responsible Federal Budget, tells Axios. "If we had done this decades ago, any of these changes would have been so much smaller.
* "Instead, we've waited until the last minute, and it will be shocking how big they'll have to be to avert insolvency," she adds. "The cost of waiting is tremendous, and we're already going to be bearing it."
State of play: The solutions fall into three buckets: raise taxes, cut benefits, or change the structure of Social Security so as to kick the can down the road. Each has its own challenges.
Raising taxes
Social Security is funded by payroll taxes amounting to 12.4% of wages (including the employee and employer shares), with no tax on earnings above $176,100 (which rises with inflation).
* One set of answers involves eliminating or changing the cap, so that more income is subject to Social Security tax.
* That may be easier said than done, however. For high earners, a 12.4 percentage point increase in the effective marginal tax rate would amount to a massive tax hike — consider that decades of fiscal politics have involved toggling the top federal tax bracket in the 30% to 35% range.
* Republicans view keeping top-end tax rates low as a core priority. For Democrats, upper-middle-income earners who would be vulnerable to a tax hike comprise a large part of their political base at this point — college-educated suburban professionals.
* Moreover, many liberals who seek higher taxes on top earners want to fund other priorities that involve expanding the social safety net, and thus would have less room to maneuver if hundreds of billions in tax revenue is deployed just to keep Social Security solvent.
Benefit cuts
There are many ways to trim benefits that avoid leaving the people most dependent upon Social Security benefits whole.
* Applying the steepest cuts to those with ample other income or assets would be one way to lower the pain — but even retirees with healthy pensions or 401(k) savings would be none to happy to see lowered Social Security benefits.
* Phase-ins can lower the political salience of cuts, for example, by raising the retirement age gradually or changing the inflation measure used for cost-of-living adjustments. But the losses to beneficiaries are no less real.
* Any way you slice it, it's not clear where the political support for benefit cuts will come from. President Trump may no longer be in office in 2032, but a key to his political success was promising not to touch Social Security, and Democrats similarly seek to hold the line on benefits.
Kicking the can
If Congress in 2032 cannot agree on a way to reset Social Security, it could simply fill the funding gap using general tax revenues. This "solution" would be fraught in its own ways.
* All forecasts point to very large deficits and debt in the early 2030s, which funneling hundreds of billions of dollars to Social Security would only widen.
* That would translate into higher interest rates and less cash available for other national priorities, whether they involve national defense, infrastructure or the social safety net for non-retirees.
* It would also break a long tradition in which Social Security is relatively self-contained, separated from the rest of the government, and thus not part of the year-to-year political winds.
The bottom line: The good news for current or soon-to-be retirees is that there is no political appetite for large-scale cuts, and in some form, Social Security will almost certainly be there for you.
* The bad news is that America faces a costly and potentially tempestuous reckoning over how to make that the case.
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Just end it, and allow people to opt out if they so wish. I hate when the government or my job force me to “save,” by taking my money away from me. F&$@ you, I can take care of my self. Let me spend or save my own damn money, meddlers
Distributing COLA....I think they should take the total available and distribute it equally among SS folks.
They can end it. They’ll need to give me my hundreds of thousands back with interest first.
Audit the program. End payments to illegals. Require 30 years of work. For starters.
That may not be entirely true. I fully expect the democrats do.
Haven’t had babies??????? The leftist, communist8, despotic filth Democrats in this country have supported abortion for YEARS!!! Primarily the Democrats have created MOST of the severe problems we are facing now and have the audacity and gall to blame conservatives. Keep it up and watch what happens next.
The government works exactly the same way as Rule 11 in Monopoly. So as long as we don’t run out of pens and paper, there will be no default.
So, let me understand this.... we can print money for illegals, other countries, welfare and such, but we can’t print money for Social Security. Rrrrrrright.
But for American citizens who have paid into the system for their entire lives?
My prediction: The night before SS runs out of money, Congress will stay in session until 2 AM and hash out a temporary fix so the money can go out.
How to fix Social Security’s day of reckoning
What big Government don’t want the tax payers to know is that the Social Security paid to those recieveing it is but a drop in the bucket compared to the Federal agencies funded from this pool.So instead of cutting what the beneficiary receives a month lets just cut funds to the Federal agencies dipping into Social Security.
“Social Security’s day of reckoning is nearly here.”
Sounds like a crisis.
We’re 39 trillion dollars in debt. We’ve been sending billions of dollars to other countries for decades. It’s time for them to return the favor.
Or...Internal Revenue Service, f*** off forever and end Required Minimum Distributions and cut income taxes on IRA/401(k) distributions up to two combined amounts: First, until all of the previous income taxes that have been paid on the money that went to SS are covered and second, for all the money that has been taken to pay into SS up to the income limits.
Algore emptied the Lockbox
Easy fix for Social Security. Remove the annual cap on the Social Security tax. Let the high earners pay their fair share.
I asked AI what is a “likely fix”?
In countries with very high or hyper inflation, pension/pension-like programs often do not (or cannot) maintain full inflation indexing — or they adopt delayed indexing or partial pass-through. That results in frequent real cuts in pension value. That’s effectively what your 5% inflation / 1% benefit growth scenario does.
But such “fixes” impose heavy burdens on retirees: over time their real income collapses, living standards plummet, and poverty among the elderly often rises sharply. Indeed, in some high-inflation countries, pensioners report large drops in real purchasing power because the pension system fails to keep up.
This is how we got there. Back in the Reagan era, SS was a separately invested pile of money which Teddy Kennedy and Tip O’Neal raided for all their “free money for welfare scam artists and vote buying schemes. In return, they left paper IOU’s in the SS fund. Republicans knew what was going on, but were too weenie to say anything. I however, was pissed off beyond belief, and my friends gave me weird looks as if to say, “WTF is wrong with you?” But, here we are.
May all the RATS and those two in particular, ROT IN HELL !
“ Require 30 years of work. For starters.”
Em…it’s a deduction from one’s pay check.
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