Social Security fund projected to run out in 8 years, potential fixes needed, urgency for action.

From Yahoo Finance: 2025-06-18 18:20:00

Social Security’s reserves are projected to run out in eight years, leaving only 77% of benefits to seniors. The Medicare trust fund is in a similar situation. A new report states that adjustments are needed to avoid this crisis, with potential fixes available, according to economist Emerson Sprick.

Combining the Old-Age and Survivors Insurance Trust Fund with the Disability Insurance Trust Fund could delay depletion until 2034, providing 81% of scheduled benefits. However, the two funds cannot be merged at this time, affecting the overall status of the Social Security program.

The Social Security Fairness Act, enacted in 2025, worsens the financial outlook of Social Security. The Medicare Hospital Insurance trust fund is also projected to exhaust its reserves by 2033, due to higher-than-anticipated 2024 expenditures and rising healthcare costs.

The Trustees project a 3.82% taxable payroll shortfall for Social Security over 75 years, up from 3.5% last year. Factors contributing to the shortfall include longer life expectancy, falling birth rates, and a decrease in the share of total earnings subject to payroll tax.

Various solutions exist to address the shortfall, such as increasing payroll taxes, raising the retirement age for younger workers, or removing the income cap subject to Social Security tax. Congress has eight years to act before cuts become necessary.

AARP CEO emphasizes the urgency for Congress to act to prevent benefit cuts. Other factors affecting Social Security’s financial status include wage growth distribution and demographic trends. The clock is ticking for lawmakers to find a solution.



Read more at Yahoo Finance: Social Security fund could run out in 8 years, trustees say. Is there hope?