Social Security benefits face an automatic cut of about 22% in late 2032 unless Congress acts. That’s when the retirement trust fund is projected to run out of reserves, according to the 2026 Social Security Trustees Report. The cut would apply to everyone collecting benefits, including current retirees, and the senators elected this week will serve through that deadline.
Social Security isn’t going bankrupt. Payroll taxes will keep coming in after 2032 and would cover about 78% of scheduled benefits. What’s running out is the savings that have been filling the gap since 2021.
How much would a Social Security cut cost you?
The nonpartisan Committee for a Responsible Federal Budget estimates that a typical couple with two incomes retiring in 2033 would lose about $16,900 a year. More than 71 million people receive monthly benefits, and Social Security provides most of the income for 43% of seniors, according to AARP. A TIAA survey found that more than one in five Americans don’t know a cut is possible.
The trustees now estimate the program’s shortfall over the next 75 years at $29.3 trillion, up from $25.1 trillion last year.
Why is Social Security running short?
There are three main reasons. Fewer workers are paying in because of lower birth rates and lower immigration. Retirees are living longer and collecting benefits for more years. Payroll taxes also apply only to wages up to a cap, which is $184,500 this year and will rise to $192,300 in 2027. Because high earners’ pay has grown faster than everyone else’s, the share of total wages subject to the tax has fallen from nearly 87% in the 1980s to about 83% today, according to Roosevelt Institute research.
Where do the new senators stand on Social Security?
Several Democrats who won contested races, including Sherrod Brown in Ohio, Josh Turek in Iowa, Abdul El-Sayed in Michigan and James Talarico in Texas, said they would raise or remove the wage cap so high earners pay more. Chris Pappas of New Hampshire said he prefers raising the cap but would also support a bipartisan commission.
Some Republicans prefer other approaches. In June, Treasury Secretary Scott Bessent argued that economic growth can strengthen the program without cutting benefits. Retiring Sen. Bill Cassidy of Louisiana has proposed a separate $1.5 trillion investment fund, modeled on the railroad retirement system, to cover part of the shortfall without raising taxes. Some beneficiaries, like a 77-year-old Kentucky man interviewed by USA Today, want a shift to individual invested accounts, though critics warn that would bring more market risk.
Is there a bipartisan Social Security plan?
There’s a process, but not a plan yet. In July, a group of senators from both parties, including Democrats Dick Durbin, Tim Kaine and Chris Coons, Republicans Cassidy, Thom Tillis, John Cornyn and Alan Armstrong, and independent Angus King, introduced the PROMISE Act. It would have the Social Security Advisory Board write a plan that keeps the program solvent for at least 50 years and require a fast vote in Congress. A House bill from Reps. Tom Cole and Tom Suozzi would create a 13-member bipartisan commission instead.
Most of the options on the table come with tradeoffs. They include raising the full retirement age to 69, increasing the 6.2% payroll tax, lifting the wage cap or slowing cost of living increases.
Why does Social Security matter so much for Black retirees?
This part gets little attention. Because of long-standing gaps in pay and wealth, Black older Americans are more likely than white seniors to depend on Social Security for most or all of their retirement income. Many Black families also rely on survivor and disability benefits. An automatic cut would fall hardest on households with the least savings, so for many Black retirees it could mean struggling to cover the basics.
How should you plan for a possible Social Security cut?
Shenandoah University accounting professor Martin Mulyadi suggests logging into your my Social Security account at ssa.gov and testing your retirement budget at 75% to 80% of your projected benefit. If your plan still works, a cut would be manageable. If it doesn’t, you have about six years to save more, work longer or reconsider when to claim.
Congress last fixed a similar shortfall in 1983, and that deal was meant to last 75 years. The question now is whether the new Senate will act before the 2032 deadline.
