Social Security Trust Funds Show Critical Shortfall as Congress Faces Urgent Decision

A new government report reveals that Social Security’s long-term financial health continues to deteriorate, intensifying pressure on Congress to address the program’s mounting funding gap as lawmakers advance competing proposals to bolster the system.

The annual report from the Social Security and Medicare trustees, released Wednesday, projects that the trust fund covering retirement and survivor benefits will remain solvent through 2033. However, without congressional action by then, the program would rely on incoming payroll tax revenue—covering only about 77% of scheduled benefits.

The outlook for combined retirement and disability trust funds has also worsened. Trustees now project these funds could cover full benefits until 2034, a year earlier than last year’s estimate. After that point, revenue would support approximately 81% of scheduled benefits. The disability insurance trust fund itself is expected to remain financially stable for the remainder of the 75-year analysis period.

The report attributes part of the program’s financial strain to the Social Security Fairness Act, signed by President Donald Trump earlier this year. That legislation repealed two provisions that reduced benefits for public-sector retirees who also received pensions from jobs outside Social Security coverage, thereby increasing projected costs.

The findings come as Congress advances multiple proposals designed to strengthen Social Security without cutting benefits. Senator Bernie Sanders of Vermont has introduced the Social Security Expansion Act, co-sponsored by Senator Elizabeth Warren of Massachusetts and nine other Democratic senators. The bill would subject wages, salaries, and self-employment income exceeding $250,000 to Social Security payroll taxes while expanding certain benefits. It also proposes raising taxes on investment income and applying those levies to specific business earnings.

Representative John Larson of Connecticut has championed similar legislation in the House through his Social Security 2100 Act, which would apply Social Security payroll taxes to earnings above $400,000 while expanding benefits. Introduced in 2023 and backed by 189 Democrats, this proposal has not been reintroduced this Congress.

A bipartisan effort has emerged in the Senate. On Tuesday, Warren and Senator Bernie Moreno of Ohio jointly stated they are collaborating on legislation to raise the payroll tax cap, arguing such changes would improve Social Security’s long-term financial stability.

The trustees again urged lawmakers to act before trust funds’ reserves are exhausted, emphasizing that timely intervention would provide policymakers with broader options and allow workers and retirees more time to adapt to necessary adjustments.

More than 70 million Americans currently receive Social Security retirement, survivor, or disability benefits.