Social Security isn’t just a line item in the federal budget—it’s the foundation of retirement for millions of Americans. For many, those monthly checks mean keeping the lights on, paying for prescriptions, or covering rent. But new warnings from the 2025 Social Security Trustees Report point to a future where those checks could shrink significantly. If nothing changes, retired workers could see a 23% cut in benefits by 2033, equal to about $553 less per month for the average beneficiary.
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Why Benefits Could Shrink
Social Security benefits come from two sources:
- Payroll taxes (the steady inflow from today’s workers and employers)
- The Old-Age and Survivors Insurance (OASI) trust fund reserves (a cushion built up from surplus years, invested in special U.S. Treasury bonds)
The problem? According to the Trustees, the OASI trust fund will run out of reserves by 2033. Payroll taxes alone won’t be enough to cover full promised benefits—leaving just 77% of scheduled payments funded.
How Much Money Are We Talking About?
In June 2025, the average retired worker received $2,005.05 per month, the first time checks crossed the $2,000 mark. With cost-of-living adjustments (COLA) averaging 2.3% annually, that number could reach around $2,405 by 2033.
But a 23% reduction would slash that to about $1,852 per month.
Here’s what that cut looks like:
| Year | Projected Average Benefit | After 23% Cut | Monthly Loss |
|---|---|---|---|
| 2025 | $2,005 | $1,544 | $461 |
| 2033 | $2,405 | $1,852 | $553 |
For retirees who depend on Social Security for most or all of their income (roughly 50% of recipients), that loss is devastating.
What’s Driving the Shortfall?
The issues aren’t new, but they’re accelerating:
- Demographic shifts: More retirees, fewer workers.
- Longer lifespans: People are collecting benefits for more years.
- Falling birth rates: Not enough young workers entering the system.
- Reduced immigration: Slower workforce growth.
- Payroll tax cap: In 2025, only the first $176,100 of wages is taxed for Social Security, leaving higher earnings untouched.
- Congressional inaction: Lawmakers have delayed reforms for decades, making solutions tougher and costlier the longer they wait.
Possible Fixes on the Table
No single solution is painless, but here are the big ones being discussed:
- Raise or eliminate the payroll tax cap – higher earners would contribute more.
- Increase payroll tax rates – a small hike shared by workers and employers.
- Raise the full retirement age – would reduce lifetime benefits for future retirees.
- Adjust COLAs – tying cost-of-living increases to a slower index.
- Means testing – reducing or phasing out benefits for wealthier retirees.
Each option comes with trade-offs and political hurdles.
Why Action Is Urgent
The Trustees stress that acting sooner allows for gradual changes. Waiting until 2033 could mean abrupt, painful cuts or steep tax hikes. For retirees, that could mean scrambling to make ends meet. For workers, it could mean higher contributions on short notice.
Some posts have claimed Social Security will “run out of money in 2033.” That’s not accurate. The trust fund reserves will be depleted, but payroll tax revenue continues, covering about 77% of benefits. Cuts only happen if Congress fails to act. Official details are available in the 2025 Social Security Trustees Report.
FAQs
How much will Social Security benefits be cut by 2033?
About 23%, or roughly $553 per month for the average retired worker.
Will Social Security go bankrupt?
No. Payroll taxes will continue, but they won’t cover 100% of promised benefits.
What’s the main reason for the funding shortfall?
Demographic changes: fewer workers, lower birth rates, longer retirements, and income inequality.
What’s the payroll tax cap in 2025?
Only wages up to $176,100 are taxed for Social Security.
