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One in five Americans currently receive Social Security, which provides an income for retirees and the disabled. And it’s been well known for years that the program’s long-term finances are in trouble: Fewer future workers are being born to support an aging population. Adding to the problem, fewer immigrants are now coming into the country to boost the labor force.
On Tuesday, the panel that oversees the program’s trust fund released its annual report, warning that its finances have deteriorated even further. The trust fund is now expected to run dry in late 2032, not early 2033 as previously projected. Barring action from lawmakers, that will trigger an automatic cut in benefits by 22%. Notably, the report pointed to the Trump administration’s immigration policies and tax cuts as contributing to the trust fund’s insolvency.
As Rice University economist John W. Diamond notes, this deadline means that whoever is elected president in 2028 will own this problem. While lawmakers will have more options if they act sooner rather than later, they’re facing even more headwinds than the early 1980s, when a similar crisis pushed President Ronald Reagan and congressional leaders to hammer out a bipartisan deal. Now, the national debt is far greater – topping 100% of GDP – and interest rates are unlikely to fall much lower.
“These pressures don’t mean Social Security will disappear. It will always exist as long as workers and employers pay into the program,” Diamond writes. “But for anyone who expects to retire starting in the early 2030s, the potential for a cut to benefits is real.”
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