The Future of Social Security (2025 edition)
One of the most common questions I get on the topic of Social Security in a new client's retirement plan is "Will there be anything left when I retire?" It's a fair question given the solvency issues of the Social Security trust fund.
Like most issues, the media loves to discuss the problem and rarely the solution.
Fortunately, there is data to answer these questions. Every year, the Board of Trustees for Social Security reviews the financial status of the trust fund that pays out Social Security benefits. Recently, the board released its 2025 report, and below is my summary.
Summary of 2025 Report
Current Costs and Income - In 2024, the cost of the program was just over $1.48 trillion, and there was $1.41 trillion in income, so it came fairly close to breaking even, dipping into reserves slightly.
From 2025 to 2034 – The reserves are currently $2.72 trillion, a 2.5% decrease from the prior year. Total costs are projected to be more than income every year until the reserves are depleted. During 2034, they are projected to be depleted – a decrease of one year from what was reported last year (2035).
It is important to note that if no changes are made and reserves are depleted, it does not mean that Social Security will stop. It would mean that benefits would be reduced by an estimated 20-25%. However, there are several possible solutions to prevent this that I believe politicians will make, unfortunately, probably later rather than sooner.
Solutions – The board provided many different solutions, three of which have been widely discussed.
Increase payroll taxes by 12.4% to 16.0%. This could mean both the employee and employer pay an additional 1.8% into Social Security.
Increase the retirement age for younger workers (i.e, can’t claim benefits until 70 or later).
Cut benefits by 22.4%.
I think it’s likely that it won’t be an all-or-nothing solution. There may be a slight increase in taxes and the retirement age. There may be a slight cut to benefits. I do not want these solutions to downplay the seriousness of the issue. Action should be taken, preferably sooner rather than later, to protect current and future generations. But there are reasonable steps that can be taken to keep Social Security in place for many years to come.
Happy Planning,
Alex
This blog post is not advice. Please read disclaimers.