For millions of Americans, Social Security is the backbone of retirement income. Monthly checks cover rent, food, prescriptions, and utilities. But a new warning from the 2025 Social Security Trustees Report shows that future retirees may face a 23% benefit cut by 2033 if lawmakers don’t act.
That reduction equals about $553 less per month for the average retired worker.
Why Benefits May Be Cut in the Future
Social Security benefits are funded from two sources:
- Payroll taxes – collected from today’s workers and employers.
- Old-Age and Survivors Insurance (OASI) trust fund reserves – savings built from past surpluses, invested in U.S. Treasury bonds.
The problem: by 2033, the OASI trust fund will run out of reserves. At that point, payroll taxes will still cover 77% of scheduled benefits, but retirees would face an automatic cut unless Congress acts.
How Much Money Could Retirees Lose?
In June 2025, the average retired worker received $2,005.05 per month, marking the first time benefits crossed the $2,000 threshold. With annual cost-of-living adjustments (COLA) averaging about 2.3%, the average monthly check could reach $2,405 by 2033.
But if a 23% cut happens, benefits would fall to around $1,852 per month — a loss of $553.
| Year | Projected Average Benefit | After 23% Cut | Monthly Loss |
|---|---|---|---|
| 2025 | $2,005 | $1,544 | $461 |
| 2033 | $2,405 | $1,852 | $553 |
For the 50% of retirees who rely on Social Security for most or all of their income, this loss could be devastating.
What’s Driving the Shortfall?
The funding challenge isn’t new, but it’s getting worse due to several factors:
- Demographic shifts – More retirees, fewer workers.
- Longer lifespans – Retirees collect benefits for more years.
- Lower birth rates – Fewer younger workers entering the system.
- Reduced immigration – Slower workforce growth.
- Payroll tax cap – In 2025, only the first $176,100 in wages is taxed for Social Security. Higher earnings above this cap aren’t taxed.
- Political delays – Lawmakers have postponed meaningful reforms for decades.
Possible Fixes Being Discussed
Experts and lawmakers have suggested several potential solutions, though each comes with trade-offs:
- Raise or eliminate the payroll tax cap – Require higher earners to contribute more.
- Increase payroll tax rates – Small increases shared by workers and employers.
- Raise the full retirement age – Reduces lifetime benefits for younger generations.
- Adjust COLAs – Use a slower inflation index, leading to smaller annual increases.
- Means testing – Reduce benefits for wealthier retirees.
None of these options are painless, but early action could spread out the impact.
Why Action Is Urgent
The Trustees emphasize that fixing Social Security sooner allows for gradual changes. Waiting until 2033 could force sudden, painful cuts or steep tax hikes.
It’s important to note: Social Security will not go bankrupt. Even if the trust fund runs dry, payroll taxes will still cover most benefits. Cuts only happen if Congress does nothing.
Frequently Asked Questions (FAQs)
Q: How much will Social Security benefits be cut by 2033?
About 23%, or roughly $553 per month for the average retired worker.
Q: Will Social Security run out of money?
No. Payroll taxes will continue, but without reforms, they’ll only cover 77% of benefits.
Q: What’s the main reason for the shortfall?
Demographic changes — more retirees, fewer workers, lower birth rates, and longer life expectancy.
Q: What is the payroll tax cap in 2025?
Only wages up to $176,100 are taxed for Social Security. Income above that is exempt.
Final Thoughts
The potential cut of $553 per month could have a massive impact on retirees who rely heavily on Social Security. While the system is not going bankrupt, it faces a funding gap that requires action.
The sooner Congress acts, the smoother the transition can be. For retirees and workers alike, staying informed about Social Security’s future is critical — because the decisions made today will shape tomorrow’s retirement.