• Money
  • Life
  • Entertainment
  • Science
DirectSharing Social Security is Nearing a ‘Total System Collapse,’ Here’s Why
0Shares
0 0 0 0 0
DirectSharing
  • Money
  • Life
  • Entertainment
  • Science
Money

Social Security is Nearing a ‘Total System Collapse,’ Here’s Why

Sven Kramer Jul 03, 2025
0Shares
0 0 0 0 0

Social Security is facing a tipping point. Starting in 2034, current benefit levels could take a serious hit unless Congress steps in. The trust funds that back retirement and disability benefits are running out faster than expected, thanks to policy shifts, economic changes, and political gridlock.

Notice, Social Security depends on two major funds: OASI for retirees and DI for people with disabilities. Combined, they are projected to run out by 2034. When that happens, payouts will be slashed across the board. Retirees could see just 81% of their promised benefits.

Freepik / If OASI runs out first, which could happen by 2033, payouts would be cut even deeper.

Retirees would be looking at just 77% of the benefits they were expecting, putting pressure on household budgets across the country.

In 2025, lawmakers passed the Social Security Fairness Act. It eliminated limits on benefits for public-sector workers like teachers and police. The move increased payouts for these groups, but it also sped up how fast the trust funds are being drained.

Social Security relies on workers paying into the system to support retirees. But the U.S. fertility rate is stuck at 1.6 children per woman, far below what is needed to maintain population size. Fewer babies today mean fewer workers paying taxes tomorrow.

Immigration Has Slowed

New immigrants tend to contribute more to Social Security than they take out. But with immigration lower than expected, fewer people are feeding the system. This drop cuts payroll tax revenue and adds to the funding shortfall.

Another hit comes from how Americans are paid. The share of GDP that goes to wages is falling, and that hurts Social Security. Payroll taxes are based on wages, so when wages shrink as a share of the economy, less money goes into the fund.

People are anxious. There has been a 17% jump in folks claiming Social Security early this year. While this locks in smaller checks for life, some are too worried about future cuts to wait. The trend could strain the system even further.

Freepik / If Congress doesn’t act in time, Social Security will still send checks, but they will be smaller. By 2033 or 2034, all benefits could face automatic cuts.

These cuts would be around 23%, and they wouldn’t be temporary.

Medicare is Also Facing Trouble

Medicare’s hospital fund is also heading for depletion by 2033. If that happens, hospital benefits could be slashed by 11%. The two systems face similar issues: too many retirees, not enough working-age taxpayers.

Groups that defend Social Security are pushing Congress to act. They argue the program is still affordable and only needs about 6% of GDP even in 2100. Their message is clear: waiting means accepting massive benefit cuts.

Lawmakers have floated a few ideas. One is taxing wages above $400,000, which could bring in more money. Another is merging the retirement and disability funds to keep payments stable longer. Neither proposal has passed.

Even if the trust funds run dry, Social Security isn’t going away. Current workers will still pay payroll taxes, and those taxes will fund about three-quarters of current benefits. But for retirees depending on full checks, that is a painful drop.

The big warning here is timing. Experts say Congress needs to act before the early 2030s. Once the cuts begin, fixing the system becomes harder and more expensive. Every year of inaction increases the risk of long-term damage.

Tags Homepage money
Share This
0Shares
0 0 0 0 0
Previous Article
How Money and Power Greatly Impact Male Self-Esteem
No Newer Articles
Comments (0)

Leave a Reply Cancel reply

You must be logged in to post a comment.

Related News

Money
How Money and Power Greatly Impact Male Self-Esteem
Sven Kramer Jun 03, 2025
Money
How the Vatican’s ‘Financial Crisis’ Will Test the New Pope
Sven Kramer May 06, 2025
Money
How to Have a Realistic Money Talk With Your Partner
Sven Kramer Apr 08, 2025
Money
What is the ‘24-hour Economic Blackout’ All About? A Closer Look
Sven Kramer Mar 14, 2025
DirectSharing
  • Privacy Policy
  • About Us
  • Contact Us
  • Home
  • Terms Of Use

Copyright . All RIGHTS RESERVED.

  • Lost Password Back ⟶
  • Login
  • Register
Lost Password?
Registration is disabled.