Social security is an important source of income for millions of Americans, but after 90 years, this program faces significant financial challenges that can shape it for future generations.
If the congress fails to act, retirees can see their monthly examination cut by 23 percent in less than a decade – cut thousands of dollars from the average annual benefits of people.
MPs are not possible to let it happen, but so far, they have chosen to kick cans, avoid solutions that are not politically popular and complicate the end improvement.
President Franklin D. Roosevelt (D) signed a social law into a law on August 14, 1935, as a way to provide “several measures of protection to average citizens and their families against the loss of work and oppose old age ridden by poverty.”
This is what must be known about the state of the program 90 years later:
How many people receive social security?
Nearly 70 million people received social security allowances in July, with an average check of $ 1,863. Retired workers are the largest parts-around three quarters, or around 53 million.
The program also supports other groups: Nearly six million people receive the benefits of happy last month, while more than eight million disabilities insurance collected.
Most people aged 65 years and over receive most of their income from social security, making it a vital way of life for millions of adults – and children – the opposite will fall below the poverty line.
Without the benefits of social security, 37 percent of older adults will have income below the official poverty line in 2023 – on the contrary, only 10 percent do it, according to the budget center and policy priorities.
More Americans now hope to rely on social security than in the past. In the recent Gallup poll, 37 percent of non-reference said that it would be a “main source” of retirement from 28 percent two decades ago.
When social security allowances can be cut
Social security will not be lost, but in less than a decade, millions of Americans can see their monthly retirement checks if the congress does not intervene.
Program pension control funds are expected to expire in 2033, where social security will only be able to pay 77% of the promised benefits.
For retirement workers today, it means that the discount is around $ 460 per month – more than $ 5,500 per year.
Who said, experts warned not to claim social security allowances earlier than the fear that the program may not exist in the future, because doing that results in a permanent lower monthly examination.
Federal parliament members are expected to act before the deduction applies, but the main concern is that the longer they are waiting, the more complicated the improvement.
Social security is strongly supported so that, until now, most politicians have avoided movements that can be proven unpopular with voters.
The last large reshuffle came around 40 years ago when the Federal government gradually increased the full retirement age from 65 to 67. When it happened in 1983, the bankruptcy of social security was only a few months away.
Why social security faces financial shortages
Lack of financial programs mostly originates from changes in the country’s demographics, which has resulted in fewer workers who support more retirees.
In 2010, there were 43 million people aged 65 years and over, and in 2024, that number had developed to 59 million, according to Peter G. Peterson Foundation. At the same time, the number of workers contributing to this program had fallen – from 2.9 closed workers per recipient in 2010 to 2.7 in 2024 – the projected ratio decreased further to 2.3 in 2044, the foundation said.
The imbalance is a concern because social security is mainly funded through salary taxes, which contributes around 90 percent of the revenue of trusteeship funds. Fewer workers means less salary tax income.
The good news is that demographic shifts are not surprising, giving the policy maker time to prepare. The bad news is not easy to reverse, and the main policy changes may be needed to sustain the program for future generations.
Another thing to remember: Despite increasing the income limit from time to time, smaller wages are now subject to salary tax compared to the 80s and 90s. Part of the wages and salaries covered by salary taxes had dropped to around 82 percent, down from 90 percent in 1983, according to the Tax Foundation.
Some of that is due to an increase in the benefits provided by the employer, such as health insurance, which can be deducted from taxes, and thus does not face salary income or tax, the tax foundation said.
What can be done to fix social security?
MPs have several options: Increase social security income, reduce costs or, most likely, some combinations of both.
Democrats want to raise more money by making high recipients paying social security tax on income above the current restrictions. For 2025, taxes only apply to the first $ 176,100, so that each of the above incomes that are not taxed.
Gradually increasing salary tax rates is another way to increase income. At present, the social security tax rate is a total of 12.4 percent – divided evenly between employees and entrepreneurs each 6.2 percent. The combined level has been stable since 1990.
While raising taxes rarely popular, voting shows increasing income generally more acceptable by the public than cutting benefits.
The Pew 2024 research survey found that the majority of the Republican (77%) and Democrats (83%) did not support the reduction in the benefits of social security.
President Trump has repeatedly promised not to cut social security benefits and even suggest eliminating federal income tax on pension checks – although the step will worsen the lack of finance of the program.
Like his predecessor before him, Trump has offered a little concrete policy direction to fix social security. Elon Musk’s technology billionaire’s efforts to eradicate widespread waste, fraud and misuse are less than expectations and triggers significant confusion.
Earlier this year, Brookings released a bipartisan blueprint to fix social security.
The proposal includes an increase in tax -based income such as increasing maximum taxable ceiling and raising salary tax from 12.4 percent to 12.6 percent. It also suggests reducing benefits, such as increasing retirement age for high producing, among other changes.
