Report shows Social Security payments could be cut

The trust fund behind many Americans' monthly Social Security benefits could be depleted in the next decade, leading to cuts in benefits of up to 23%.

The OASID Board of Trustees released a report June 18 that projected the fund could run dry in 2033. Here's what it means.

Q: What is the Social Security Board of Trustees?

A: A six-member board made up of the Treasury, Labor and Health and Human Services secretaries and Social Security's commissioner. The board also has two members appointed by the president. The board's job is to provide annual reporting on Social Security's current and projected financial status.

Q: What does OASDI mean?

A: Old-Age, Survivors and Disability Insurance (OASDI) is a larger part of Social Security that includes OASI (Old-Age and Survivors Insurance) and has disability insurance. OASI and disability insurance have separate funds but are analyzed together as OASDI to show the overall financial status.

Q: How has the board's fund depletion dates changed during the last five years?

A: They have remained relatively consistent. In 2021, the board projected a depletion year of 2034 for OASDI and 2033 for OASI. The depletion years toggled back and forth through the 2025 report by a year, often driven by economics and other factors.

Disability insurance taken alone is not expected to be depleted in the 75-year long-range projection period ending in 2099.

Q: Why is the Board of Trustees projecting OASI to be depleted in 2033?

A: It's simple — Social Security's costs exceed income for 2025. That's nothing new, though. Costs have exceeded income since 2021.

But the report also noted other "substantial changes" affecting matters.

First, the Social Security Fairness Act of 2023, enacted Jan. 5. It repealed the Windfall Elimination Provision and Government Pension Offset which had reduced or eliminated Social Security benefits for about 2.8 million people receiving pensions from Social Security-exempted jobs like teachers, police officers and firefighters. Those recipients received a lump sum repayment for the amount reduced in 2024, and an increase going forward — a big hit to the Social Security coffers.

Second, there are more than 11,000 baby boomers turning 65 every day, with fewer young workers available to pay taxes to support the system. The birth rate also is down, the report noted, and that affects the depletion date.

Q: Would recipients stop receiving a check if Social Security funds are depleted?

A: No, but they'd be getting smaller checks.

According to the report, once we reached reserve depletion there would be enough to cover just 77% of benefit payments.

Q: How can we avoid cuts?

A: NPR reported Congress could use a combination of tax increases and reduced benefits. In addition, Social Security taxes are currently not paid on income above $176,000. Congress could change that to help fill the gap.

The board also reported the actuarial deficit for the combined trust fund is 3.82% of taxable payroll from 2025 through 2099. That is larger than the 3.5% deficit for 2024 through 2098 in the 2024 report.

The report said revenue would need to increase "equivalent to an immediate and permanent payroll tax rate increase of 3.65 percentage points to 16.05%," for a solvent OASDI through 2099. It also said OASDI could reduce all current and future benefits by 22.4% through 2099 or by 26.8% to only those eligible in 2025 or later.