Congress has until 2032 to prevent Social Security benefit cuts

LiveNOW’s Andy Mac is talking with Zach Cohen, Bloomberg Government’s senior budget reporter, as concern grows among American workers and retirees about possible Social Security cuts. Fox Business reports that the Social Security Administration’s 2026 Trustees Report says the federal retirement program is less than seven years from fiscal exhaustion.

Experts say the Social Security trust fund is expected to be depleted by 2032, in part because politicians have weakened its finances.

Once the trust fund is exhausted, federal law limits payments to the payroll taxes coming in each year, which would automatically reduce retiree benefits by about 22% to 24% unless Congress steps in.

Here is what to know.

What is Social Security?

Social Security began in 1935 as a safety net for the nation’s oldest and most vulnerable residents, after President Franklin Roosevelt signed it into law. The Social Security Administration says benefits are paid to about 70 million Americans.

When workers pay taxes, part of that money helps finance Social Security. Those funds are used to pay benefits to retirees, people with disabilities, survivors of deceased workers, and dependents of beneficiaries.

Any money not needed immediately is placed in the Social Security trust fund. Later, when workers retire, contributions from the current workforce, along with money in the trust fund, are used to pay monthly benefits. If the trust fund runs dry, Social Security would rely only on payroll taxes unless Congress acts, which would trigger an automatic benefit cut of 22% to 24%.

When the Social Security trust fund is depleted, federal law requires benefits to be limited to incoming payroll taxes, creating an automatic 22% to 24% reduction for retirees unless Congress intervenes. (Photo illustration by Kevin Dietsch/Getty Images)

Rising health care costs and government spending, including the tax provisions in President Trump’s One Big Beautiful Bill Act, have reduced trust fund revenue and accelerated depletion.

As Social Security Works Executive Director Alex Lawson told FOX Local in 2024, workers essentially pre-funded their retirement because they paid more into Social Security than was needed to cover current benefits in a pay-as-you-go system.

The benefit you receive is based on a percentage of your highest wages over your top 35 earning years, as well as the age at which you begin claiming benefits.

What is the Social Security retirement age?

Benefits can be claimed as early as age 62, but doing so permanently lowers the payment. Waiting until full retirement age, 67, allows workers to receive 100% of their eligible benefit. For each year someone waits beyond full retirement age, the monthly benefit rises by 8% until age 70.

Will Congress act to save Social Security?

The Committee for a Responsible Federal Budget said Social Security has been moving toward insolvency for some time, and that politicians have made the situation worse in recent months.

Republicans and Democrats agree that changes are needed to preserve the program, but they have not settled on a fix. Some Democrats, along with GOP Sen. Bernie Moreno, have proposed raising Social Security taxes on the wealthiest Americans. Workers currently pay Social Security tax only on income up to $184,500 a year. Removing that cap would bring in more than $3.2 trillion for the trust fund over a decade, according to the Peter G. Peterson Foundation.

Others support lifting the cap only above a certain income level. One proposal from Sen. Sheldon Whitehouse, D-R.I., and Rep. Brendan Boyle, D-Pa., would apply the payroll tax to income above $400,000.

Republicans, meanwhile, have suggested raising the retirement age and generally oppose tax increases to shore up Social Security.

Advocates say the choice comes down to two basic options.

“Pay more or get less,” Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, told The Associated Press.

A proposal from Sens. Dick Durbin, D-Ill., and Bill Cassidy, R-La., would not mandate a specific fix. Instead, it would create a process for Congress to act. The bill would have the bipartisan Social Security Advisory Board gather public input and send draft legislation to Congress aimed at keeping the retirement trust fund solvent for at least 50 years.

A report has warned that stabilizing the program could place significant long-term costs on younger taxpayers.

Even without prescribing a solution, the bill has struggled to gain support. Cassidy recently expressed frustration on the Senate floor.

“For some people, the time to do Social is never,” Cassidy said. “Don’t disturb Congress. They don’t want to take a tough vote. Even if that vote only sets up a process.”

AARP has opposed the measure, saying it would effectively fast-track changes through a process that limits amendments and imposes arbitrary deadlines.

Separately, Cassidy and Sen. Tim Kaine, D-Va., have proposed creating a $1.5 trillion fund that would be invested in stocks and other higher-risk assets over 75 years.

The seed money would come from additional Treasury borrowing. After 75 years, the fund’s assets would be used to repay the Treasury for the initial seed money and the borrowing used over that period to keep Social Security payments flowing, a total now projected at about $26.6 trillion.

Debt watchdogs are concerned.

The Committee for a Responsible Federal Budget called it “a dangerous, debt-funded gamble that would come with huge risks and costs.”

The Source: This article includes information from the Social Security Administration, The Associated Press, the Committee for a Responsible Federal Budget, and previous FOX Local reporting.