According to a recent survey on social security by TIAA, more than one-fifth of Americans are unaware that their social security benefits could be cut by about 20% in about six years.

According to the 2026 "Social Security Trustees Report," retirement trust funds that pay benefits to retirees and survivors are expected to deplete their reserves by the fourth quarter of 2032. After that, incoming payroll taxes will only be able to cover 78% of the planned benefits. The resulting 22% reduction will apply universally, including those who have already begun receiving benefits.

“The term ‘insolvent’ is somewhat misleading when it comes to the predictions made by trustees,” said Shenandoah, a professor of accounting at the university, and also the YHB Chair Professor of Accounting Donations, Martin Mulyadi. He pointed out that wage taxes will continue to flow in after 2032: “Social security won’t run out of money in 2032; rather, it’s the savings that will be depleted.”

This issue has a huge impact. AARP states that social security distributes benefits to over 71 million people each month and provides the main source of income for 43% of the elderly. Committee for Responsible Federal Budget ( CRFB ) estimates that a 22% cut would result in a dual-income couple retiring in 2033 losing approximately $16,900 per year.

CRFB has been warning that the project is "on a path toward insolvency," while Fortune previously reported that its financial condition has never been so bad since 1983. After the trustee confirmed a 22% cut in June, the alarms were further raised.

"The United States has a $25 trillion problem," said Michael Liner, the founder of the law firm Liner Legal that specializes in social security and disability benefits, and a disability lawyer himself. "It's the gap between the amount that social security promises to pay and the amount it can actually afford to pay."

The trustee now estimates that the gap over these 75 years is even higher, amounting to $29.3 trillion at present value, which is higher than the $25.1 trillion reported last year. If there are no changes, Liner says that cuts will come automatically: “No voting, no warnings, just simple mathematics.” He added that for many retirees, this will be the difference between being able to make ends meet or not.

Why Retirement Trust Funds Are Gradually Depleting

Social security is primarily funded by payroll taxes. For decades, these taxes have exceeded project expenditures, and the surplus has accumulated into reserves for two trust funds: the Old Age and Survivors Insurance ( OASI ) fund for retirees and survivors, and the Disability Insurance ( DI ) fund.

According to data from the Congressional Research Service in the United States, this situation changed in 2021 when the expenditures of pension funds began to exceed their total income. Since then, reserves have been used to fill the gap.

Mulyadi said, "In 2025, social security revenues will be approximately 1.45 trillion US dollars, and expenditures will be around 1.61 trillion US dollars. The shortfall will be covered by reserves."

The situation of the disability fund is better; the trustee has not predicted that it will be depleted at any point in the next 75 years. If Congress merges the two funds according to the law, according to CRFB, the combined reserves could last until 2034, and after that, they would still be able to cover 83% of the benefits. However, this would require amending the law, and it would not be able to make up for the underlying shortfall.

The public has already noticed this issue. A survey conducted by AARP in June 2025 showed that only 36% of Americans are confident about the future of social security, which is the lowest level since 2010.

A large part of this pressure comes from the demographic structure. Today, the number of people receiving social security benefits is approximately twice that of 1980, when around 35.5 million people were receiving benefits. Lower birth rates mean there are fewer workers paying payroll taxes, retirees receive benefits for longer periods, and the reduction in immigration has also shrunk the pool of labor force that pays payroll taxes.

Inequality also plays a role in this. The wage tax only applies to income that does not exceed a certain ceiling, which this year is set at $184,500, while high-income individuals experience faster salary growth than others. According to research by Roosevelt Institute and reported by CBS News, the proportion of total wages subject to the wage tax has decreased from nearly 87% in 1984 to about 83% today.

"The Social Security Trust Fund is under pressure because Congress has failed to update this program based on our actual economic situation," said Elizabeth Wilkins, CEO of the progressive think tank Roosevelt Institute. "Too much income flows to the top, and that income escapes social security taxes."

The Congress once resolved a similar crisis in 1983.

The last time social security approached this situation, Congress took action. The amendment in 1983 gradually raised the full retirement age from 65 to 67, and for the first time, federal income tax was levied on certain benefits.

"There have been two instances in our history where it was argued that social security would become insolvent," said Ernie Wingard, an advisor to Capital Choice Financial Group. "In both cases, Congress managed to reach an agreement at the last moment and saved it."

The remedial plan in 1983 was aimed at ensuring that the project would remain solvent for 75 years. If the pension fund were to be depleted as expected by 2032, it actually managed to last for about 50 years instead.

Fixing solutions placed on the desktop and the choices to be made regarding them

Legislators have a variety of tools at their disposal. The tools provided by the Actuaries Society of America, as well as the options listed in the analyses conducted by the Social Security Administration, include:

• Raise the full retirement age from 67 to 69 years old.
• Raise the wage tax rate from 6.2% to 7.2%, to be borne by both employees and employers respectively.
• Raise the upper limit of taxable income – set at $192,300 in 2027 – to a higher level, such as $250,000 or $400,000.
• Using different inflation indicators to calculate annual cost-of-living adjustments ( COLA ) will slow down the growth of benefits.

Mulyadi said, "Any repair plan must somehow fill this gap, such as increasing income by raising tax rates or the upper limit of taxable income, and slowing down the growth of benefits by delaying the full retirement age or adjusting benefit formulas. Each plan comes with trade-offs, and the longer Congress drags its feet, the greater each adjustment will have to be."

The focus of the debate is on how to combine these measures. In a debate reported by Fortune, two economists with opposing views on whether to gradually phase out social security agreed that wealthy Americans must pay more money. Meanwhile, US Treasury Secretary Scott Bessent stated in June that economic growth could support the program without cutting benefits.

"This is definitely solvable," said Nancy LeaMond, Executive Vice President and Chief Advocate and Participant Officer of AARP. "Congress has hundreds of tools at its disposal to strengthen social security and fill about 20% of the gap, without cutting into the benefits that Americans have earned through a lifetime of hard work."

"This should be a wake-up call: Congress needs to take action," said Myechia Minter, CEO of AARP, in a statement in June. "Americans work hard their entire lives and contribute to social security, and they deserve to rely on it in their retirement."

Regardless of the final choice made by the legislators, they still have about six years to make a decision.

How to prepare for a possible 22% cut

For families, Mulyadi suggests not planning based on just one figure, but rather preparing according to a range. “Log in to your my Social Security account on ssa.gov, check your estimated benefits, and then test your retirement budget at about 75% to 80% of that amount,” he said.

"If the plan is still feasible, then making cuts is just an inconvenience," he said, "If not, you still have time to save more, work a little longer, or reconsider when to apply for it."