Since January 1940, Social Security has served as a crucial source of income for older Americans who are no longer able to support themselves through work. Gallup's annual surveys over the past 25 years reveal that between 80% and 90% of retirees depend on their monthly Social Security checks to help pay for at least some of their living costs.
Given Social Security's significance to the financial security of the nation's retirees, one might assume lawmakers would make its stability a top priority. However, over the past forty years, the foundation of this essential program has steadily weakened.
Image source: Getty Images.
According to some projections, the Old-Age and Survivors Insurance (OASI) trust fund—which pays benefits to retirees and survivors—could run out of its reserves in just seven years. This timeline was accelerated by President Donald Trump signing the "Big, Beautiful Bill" into law.
While Social Security is not at risk of bankruptcy, insolvency, or stopping payments altogether, the ability to maintain current benefit levels, including annual cost-of-living increases, is in jeopardy after the fourth quarter of 2032.
Reinforcing Social Security will require making difficult and potentially unpopular choices, a reality that the program’s new Commissioner, Frank Bisignano, appears to understand.
What is the real problem with Social Security?
If you browse social media, you'll encounter plenty of theories about why Social Security is in trouble, such as Congress raiding the trust funds or undocumented immigrants collecting benefits. However, neither of these claims is supported by evidence.
The 2025 Social Security Board of Trustees Report projects a $25.1 trillion funding gap over the next 75 years, along with the anticipated depletion of the OASI trust fund. If the surplus built up over the years is exhausted, benefits may need to be slashed by as much as 23% to avoid further reductions until 2099.
If the OASI trust fund is depleted, significant benefit reductions will be required. Data on US Old-Age and Survivors Insurance Trust Fund Assets at Year-End from YCharts.
The main reasons for Social Security’s worsening finances are five ongoing demographic trends:
- The retirement of baby boomers is reducing the ratio of workers to beneficiaries.
- People are living much longer than when Social Security began in 1940, but the program was not designed to pay benefits for several decades.
- Net legal immigration to the U.S. has declined since the late 1990s. Social Security depends on younger legal immigrants contributing payroll taxes from their earnings.
- The U.S. birth rate reached a record low in 2024, which will further lower the worker-to-beneficiary ratio in the future.
- Wages for top earners have increased faster than the payroll tax cap, allowing more income to escape taxation. In 2025, only earnings up to $176,100 are subject to the payroll tax, with income above that exempt.
Congress also bears responsibility—not for the myth of misappropriating funds, but for failing to act or compromise, which has allowed the issue to persist year after year.
"All options are on the table"
Frank Bisignano, the new head of the Social Security Administration (SSA), is acutely aware of the consequences of inaction for the more than 70 million Americans who receive traditional benefits (retirees, disabled workers, and survivors). That's why he made the following notable comments on Fox Business's Mornings with Maria:
Fox Host: "Would you consider raising the retirement age?"
-- More Perfect Union (@MorePerfectUS) September 19, 2025
Trump's Social Security Administration Commissioner: "I think everything is being considered, yeah." pic.twitter.com/kdyVlyN7pX
Bisignano’s key message was that "everything's being considered," in response to Maria Bartiromo’s question about increasing the full retirement age. The full retirement age is when a worker qualifies for 100% of their monthly benefit. For those born in 1960 or later, this age is 67.
However, Bisignano clarified a few days after his interview that raising the full retirement age is not currently being considered. President Trump has also stated that his administration would safeguard Social Security benefits, and increasing the retirement age would contradict that promise.
With the option of raising the full retirement age off the table for now, Bisignano sees a few main alternatives for shoring up Social Security.
One approach would be to raise or remove the cap on taxable earnings. Applying the 12.4% payroll tax to wages and salaries above $176,100 (excluding investment income) would bring in significant new revenue. Both former President Joe Biden and Vice President/Democratic nominee Kamala Harris have proposed reinstating the payroll tax for the highest earners to help stabilize Social Security.
Because increasing or eliminating the payroll tax cap would impact only about 1% to 6% of workers (since most already pay the tax on all their earnings), this idea enjoys substantial support.
Another proposal that surfaces occasionally is means-testing benefits, which would reduce or eliminate payments for individuals with higher incomes.
While these widely supported measures would help improve Social Security’s finances, they fall short of fully addressing the program’s long-term funding gap.
Image source: Getty Images.
Even though it’s unpopular, raising the full retirement age should be considered
Social Security illustrates that popular solutions are not always the most effective. From a financial perspective, raising taxes on high earners or all workers is logical. The program needs an immediate revenue boost to counter the looming depletion of the OASI trust fund.
However, studies indicate that taxing high earners—or even all earned income—does not fully resolve Social Security’s projected 75-year deficit. A 2021 analysis by the SSA’s Office of the Chief Actuary looked at the impact of subjecting all earnings to the payroll tax:
If all earnings were subject to the payroll tax, but the current-law base were retained for benefit calculations, the Social Security trust funds [OASI and Disability Insurance trust fund, combined] would remain solvent for about 35 years.
To be clear, extending solvency by 35 years gives Congress more time to find additional solutions. Still, the reality is that focusing only on "taxing the rich" is not a complete fix. It delays the problem for a few decades, but eventually, Social Security would again face the prospect of benefit cuts.
Although raising the full retirement age is generally unpopular, it should still be considered as a way to help stabilize Social Security.
Increasing the full retirement age would not affect current beneficiaries or those nearing retirement. Instead, it would be phased in gradually, requiring future retirees to either wait longer for full benefits or accept a larger permanent reduction for early claiming. Either way, this would reduce the program’s long-term expenditures.
The advantage of including this option is that it addresses both immediate and long-term challenges. Expanding payroll tax collection from high earners provides a short-term revenue boost, while gradually raising the full retirement age helps control costs as Americans live longer.
While a combination of gradually increasing the full retirement age and expanding the payroll tax base may not fully eliminate the projected $25.1 trillion shortfall over the next 75 years, this strategy would be far more effective than relying on a single, popular solution.
