What may happen if Congress doesn’t act
A person holds a sign that reads “Protect Our Social Security” during a rally against President Donald Trump’s tax plan near the U.S. Capitol in Washington, DC, on April 10, 2025.
Bryan Dozier | Afp | Getty Images
The clock is ticking to fix Social Security to ensure it continues to provide full benefits to the millions of Americans who receive monthly payments from the program.
Through 2032, the Social Security trust fund is used to help pay benefits to retirees, their spouses, children and survivors of deceased workers will run outAccording to the Social Security Administration.
Once that date arrives, current estimates suggest there could be a 24% benefit cut for all beneficiaries unless Congress acts sooner to address the program’s deficit.
Because Social Security is a pay-as-you-go program with money coming in on a rolling basis from payroll taxes, benefits will still be paid if the calendar reaches that date without Congress taking any action on the program’s solvency.
Experts generally say that there may be cuts in general social assistance during that period.
With only six years left on the calendar, it’s “an unfortunate but now likely possibility” that Congress will fail to intervene in a timely manner, wrote Mark Warshawsky, a senior fellow at the American Enterprise Institute, a conservative-leaning Washington, D.C. think tank. latest research.
Warshawsky said lawmakers may wait until the last minute — either in full or by the time their trust funds need to be depleted — depending on their response to the recent federal government shutdowns.
But an “alternative emergency policy” could ensure that not everyone experiences a benefit cut during that time, said Warshawsky, who previously served as deputy commissioner of retirement and disability policy at the Social Security Administration.
What might happen when the trust funds run out?
Come 2032 and if there are no changes to close Social Security’s funding gap, Congress could buy some time, Warshawsky said.
One option: Pension and disability trust funds could be combined, pushing the exhaustion date to 2034. According to Warshawsky’s research, 81% of planned benefits would then be payable.
Instead of a blanket reduction for all beneficiaries, policymakers may choose to choose who will cover these temporary reductions, Warshawsky said. Inspired by his “alternative emergency policy” Australia’s approach to part of its existence means testing its age pension programme.
Under Warshawsky’s proposal, the cuts would focus on people ages 62 to 74 who receive retirement or survivor benefits, based on the idea that younger retirees may be more adaptable or perhaps re-enter the workforce to make up for lost income. Disabled beneficiaries will be exempt.
Additionally, benefit changes will focus on specific net worth thresholds. Those with a net worth below $470,400 in 2025 dollars will be excluded from the cuts. Under Warshawsky’s plan, partial benefit cuts would apply to individuals with a net worth below $785,400 in average benefits.
Warshawsky told CNBC that beneficiaries with significant net worth could tolerate cuts at least temporarily under his proposed emergency policy. Meanwhile, much older individuals will be exempt from benefit cuts.
“It seems to me, by the way, that this is a fair way to distribute diminishing revenues,” he said.
Implementation of the proposed plan would depend on accurate government data, which could require sharing information between the Social Security Administration and the IRS, according to Warshawsky.
Warshawsky’s proposal follows 2024 research From Andrew Biggs, a senior fellow at the American Enterprise Institute, and Kristin Shapiro, a partner at BakerHostetler, a law firm. They also wrote that across-the-board benefit cuts are not inevitable if Social Security exceeds its projected bankruptcy dates.
Under Biggs and Shapiro’s plan, monthly benefits would be capped at $2,050 in 2024 dollars. About half of beneficiaries will continue to receive their monthly payments as planned. The other half, made up of higher earners, will experience increasing benefit cuts.
According to Biggs and Shapiro’s analysis, these changes mean 80% of beneficiaries would see a smaller benefit cut than if the across-the-board cuts were implemented. Moreover, according to their research, the poverty rate of the elderly will not increase.
“Whatever solution they come up with to the 2032 problems, it could require a lot of borrowing,” Biggs said in an interview with CNBC.
But he said markets could react negatively if lawmakers decide to borrow money that can’t be repaid.
Expected shortage may impact claims decisions
Surveys have found that potential Social Security retirement beneficiaries may already be factoring the program’s uncertain future into their decisions about when to file.
Eligibility for Social Security retirement benefits begins at age 62. Beneficiaries receive a permanent benefit reduction for receiving this benefit early.
Beneficiaries can make larger monthly payments by waiting until full retirement age (age 66 or 67, depending on year of birth) or later until age 70.
Still a 2025 Schröder research It was revealed that 44% of non-retirees plan to apply before the age of 67.
The most common reason respondents wanted to file a claim before age 70 was the desire to access the money as quickly as possible, at 37%, followed by fear of Social Security running out of money or stopping payments altogether, at 36%.
Financial advisors say the decision about when to file for Social Security shouldn’t be an emotional decision. Various factors must be taken into account, such as health, marital status, income, investments and taxes.
“Unless you’re in good health and there’s no longevity in your family, it probably makes sense to take it at 62,” said Crystal Cox, a certified financial planner and senior vice president at Wealthspire Advisors in Madison, Wisconsin.
Other reasons may make it reasonable to file an early claim, according to Cox. “I don’t think burnout is one of them,” he said.
At full retirement age, retirees stand to receive 100% of the benefits they are owed. They can receive an 8% increase in their social benefits for each year they delay retirement age until age 70.
Beneficiaries will wait until 70 to see 132% of their monthly earningsAccording to the Social Security Administration, full retirement age is 66.
Yet research found We see that only 10% of beneficiaries wait until the maximum application age.
