The Senate Budget Committee is set to host a panel on Social Security on Wednesday, turning fresh attention to the long-term outlook of a program that millions of people depend on for retirement and disability income.
What is Social Security?
Created in 1935 under President Franklin D. Roosevelt, Social Security provides inflation-adjusted monthly benefits to retirees, typically beginning at the age of 62, as well as to disabled workers and the surviving families of deceased earners.
Today, roughly 74 million people receive benefits through the program.
How is Social Security funded?
The program is primarily funded through payroll taxes paid by workers and employers, but rising costs driven by an aging population have strained its finances.
Social Security pays out more than $1.5 trillion annually, with policymakers increasingly warning that its current funding structure is unsustainable without changes.
New projections tied to President Donald Trump‘s One Big Beautiful Bill Act add urgency to the discussion. An analysis from the Committee for a Responsible Federal Budget found that future retirees could see benefits reduced by as much as 24%, which would amount to an estimated $18,100 annual benefit cut for a dual-earning, middle-class couple that retires at the start of 2033.
When will Social Security run out of money?
The program’s trust fund is approaching a critical threshold. Last month, the Congressional Budget Office projected that Social Security could reach insolvency at the start of fiscal 2032.
Under the Social Security Act, the program is prohibited from borrowing, meaning it would only be able to distribute benefits using incoming tax revenue if the trust fund is depleted.
Absent legislative action, that would trigger automatic cuts. Estimates suggest benefits could be reduced by about 7% in 2032, followed by average reductions of roughly 28% annually in the years immediately after.
Even with possible reductions, overall spending on Social Security is expected to continue rising.
Analysts project that the program will grow from about 5.2% of gross domestic product today to 5.9% within a decade, well above its historical average.
‘DOING NOTHING’ ABOUT SOCIAL SECURITY MEANS BANKRUPTCY IN FOUR YEARS AND A 28% BENEFIT CUT
In absolute terms, benefit payments are forecast to rise by roughly 66% over the next 10 years, second only to the growth projected for Medicare.
Wednesday’s Senate panel is expected to focus on those competing realities: a program that remains essential to tens of millions of people and a fiscal outlook that is forcing lawmakers to confront difficult choices about its future.
