Social Security’s Funding Shortfall Is Everyone’s Problem. Here’s Why

Social Security serves as a crucial source of income for millions of retirees today. And there are many workers who hope to collect monthly benefits once their careers end.

The problem, though, is that Social Security is facing a major funding shortfall that could result in benefit cuts. And while you might think that’s only something retirees have to worry about, in reality, Social Security cuts could have a much broader impact.

Social Security’s impending shortfall: What the numbers look like

Each year, the Social Security Trustees are tasked with creating a report that summarizes the program’s financial standing.

In their 2025 report, they found that Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of scheduled benefits until 2033. Beyond that point, there will only be enough money to pay 77% of scheduled benefits.

If Social Security’s OASI Trust Fund and Disability Insurance (DI) Trust Fund were to be combined, they’d be able to pay 100% of scheduled benefits until 2034. After that, there will only be enough funding to cover 81% of scheduled benefits.

To be clear, it’s only the OASI Trust Fund that’s used to pay retirement benefits. Lawmakers would have to vote to combine both funds for Social Security to be able to use its DI Trust Fund to pay benefits to retirees.

But either way, it’s clear from these reports that Social Security is in serious financial trouble. And that’s not just something current retirees have to worry about.

Why everyone needs to worry about Social Security

One important thing to realize is that if Social Security cuts benefits, those cuts could last indefinitely. In other words, it’s not just current seniors who could see their income slashed. Today’s workers could also be in line for smaller monthly benefits if lawmakers don’t find a way to shore up Social Security’s finances.

Also, any solution lawmakers use to prevent Social Security cuts could have an impact on workers today.

One popular solution, for example, is to raise the Social Security tax rate. Currently, it’s 12.4%, split evenly between employers and employees. If that rate were to increase to give Social Security a cash infusion, it would burden workers with higher taxes.

Social Security also sets a wage cap each year that determines how much income is taxed to fund the program. In 2025, it’s $176,100, but it’s rising to $184,500 in 2026.

Another solution lawmakers have toyed with is raising or even getting rid of the wage cap. That would leave higher earners paying more taxes (though this change would not necessarily impact lower or moderate earners).

Finally, some lawmakers have suggested moving Social Security’s full retirement age from 67 to 68 or later to help solve the program’s cash crisis. A change like this could force many people to work longer and delay retirement, since claiming Social Security prior to full retirement age results in reduced benefits that many people can’t afford.

Be aware – and prepare

All told, Social Security is in hot water. And while solutions exist to address the program’s funding problem, they all have consequences.

It’s important to keep tabs on what lawmakers decide in the context of Social Security. Whether you’re retired or not, that news is bound to impact you one way or another.

It may also be a good idea to brace for Social Security cuts if you’re still working and have an opportunity to boost your savings. Ramping up your IRA or 401(k) savings rate could put you in a stronger position to manage well in the face of reduced benefits should that situation come to be.

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