Retirement Social Security

Economist Warns Trump's Policies Pushing Social Security Insolvency Timeline Up

Benefit cuts could be on the horizon sooner than expected.

By Maurie Backman , Edited by Kristy DeSmit

Updated March 27, 2026

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Many older Americans rely on Social Security for a stress-free retirement. But if benefits are cut, it might seriously mess with your retirement finances.

Before the One Big Beautiful Bill Act (OBBBA) was signed into law, the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund, from which retirement benefits are paid, was projected to start reducing benefits in 2033, per the Social Security Trustees. The Social Security Trustees also said that combining the OASI and Disability Insurance Trust Funds would keep Social Security solvent through 2034.

Now, that timeline is being pushed up largely due to the impact of the OBBBA, and it could have a huge impact on current and future retirees.

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Estimated Social Security insolvency date

The Social Security Trustees have been warning for years that the program is at risk of benefit cuts. But in the wake of the OBBBA, the timeline for those cuts has accelerated.

The Congressional Budget Office now estimates that Social Security's OASI Trust Fund will be depleted by 2032, marking a two-year acceleration compared to the most recent estimate by the program's Trustees. The nonpartisan Committee for a Responsible Federal Budget (CRFB) also says that Social Security's OASI Trust Fund will be insolvent by late 2032.

OBBBA's impact on the Social Security trust fund

If you're wondering how the Social Security Trustees got their projection so wrong, it's important to understand when their report was released. The most recent Social Security and Medicare Trustees Reports were released in June of 2025. The OBBBA was not signed into law until the following month.

That's significant because the OBBBA's tax cuts, including the new $6,000 senior deduction, take critical revenue away from Social Security. Social Security gets most of its funding from payroll taxes, but it also gets revenue from taxing benefits. With fewer seniors paying taxes on benefits in light of that change, Social Security has an even bigger shortfall on its hands.

The Social Security Office of the Chief Actuary cautioned a month after the OBBBA was signed that the bill would reduce revenue for Social Security to the tune of $168.6 billion between 2025 and 2034. The office also warned that the OBBBA would accelerate the depletion of Social Security's trust funds.

OBBBA and the workforce

But that's not all. The OBBBA represents a major crackdown on immigration. If mass deportations shrink the workforce, there will be fewer wage-earners paying into Social Security, thereby stripping the program of critical revenue it needs.

That, combined with a declining U.S. birth rate, puts Social Security in a precarious position. The smaller the total labor force is, whether due to immigration policies or fewer workers being born, the less revenue the program takes in.

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It's crucial that lawmakers intervene

Although it might seem like Social Security is doomed to cut benefits, that's not a given. But if lawmakers don't act quickly to start phasing in changes that could preserve the program's trust funds and/or boost revenue, those cuts may be inevitable. And if they happen, they could be downright catastrophic.

The CRFB warns that without congressional action, a typical couple that turned 60 in 2025 would be looking at an annual $18,400 reduction in benefits, or a roughly 24% cut. That's on top of potential Medicare cuts.

Reform is not straightforward

But fixing Social Security's finances isn't exactly a simple matter, especially because financing an impending shortfall with more debt is far from optimal. Bernard Yaros, lead U.S. economist at Oxford Economics, warns that covering shortfalls with debt rather than reforms could trigger a negative reaction in the U.S. bond market.

The CRFB thinks more feasible solutions to fix Social Security's shortfall include a broader employer tax, a cap on cost-of-living adjustments for higher-income seniors, adjustments to the benefit formula, and an increase to full retirement age. Lawmakers could potentially implement these changes individually or jointly. But that's apt to take time, which Social Security doesn't have.

For example, if lawmakers vote to change full retirement age to a later age, workers (particularly older ones) would need a heads-up, so to speak. So at this point, lawmakers can't afford to delay their decision-making.

Bottom line

Social Security has never allowed benefits to be cut broadly before. For this reason, there's a good chance lawmakers will manage to find a way to prevent benefit cuts before the program's trust funds reach the point of insolvency.

But since the window for implementing solutions is narrowing, it's a good idea to plan for Social Security cuts, even though they may not happen. If you're still working, that could mean allocating a larger portion of your paycheck to a retirement plan like an IRA or 401(k). The more savings you bring into retirement, the less reliant on Social Security you're apt to be.

Current retirees are in a tougher spot when it comes to potential Social Security cuts. If you're already collecting benefits, it could pay to start looking at ways to cut costs in your personal spending. And if you're healthy enough, consider working in some capacity to boost your cash reserves in case you end up needing to supplement your Social Security checks even more.

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