For an overwhelming majority of retirees, Social Security provides more than just a monthly check. The Social Security income they receive serves as a financial foundation that helps, in some capacity, to make ends meet.
Although America’s leading retirement program has been doling out monthly benefits since January 1940, its financial outlook has never been more precarious than it is now. While Social Security isn’t in danger of going bankrupt or halting benefits, the existing payout schedule is at risk of being slashed in just six years, thanks in part to President Donald Trump.
President Trump preparing to sign a bill in the Oval Office. Image source: Official White House Photo by Daniel Torok.
Sweeping Social Security benefit cuts are only an estimated six years away
Every year for the last 86 years, the Social Security Board of Trustees has published a report detailing how Social Security collects income and tracks how those dollars are spent. But the most valuable aspect of these annual reports is the forward-looking projection of Social Security’s financial “health.”
Since 1985, the Trustees Report has cautioned of a long-term (75-year) funding shortfall. In other words, projected income to be collected over the 75 years after the publishing of a report is estimated to be insufficient to cover outlays (primarily benefits, but also includes the administrative expenses to oversee Social Security). As of 2026, this long-term unfunded obligation has ballooned to $29.3 trillion.
But the far more immediate concern for beneficiaries is the expected depletion of the Old-Age and Survivors Insurance trust fund’s (OASI) asset reserves. The OASI’s asset reserves are the excess income collected since inception that’s invested in special-issue, interest-bearing government bonds, as required by law.
BREAKING: The Social Security trust fund is on track to run out of money in late 2032, its trustees said.
It’s three months sooner than projected last year.
— unusual_whales (@unusual_whales) June 9, 2026
According to the 2026 Trustees Report, the OASI’s asset reserves are on pace to be exhausted by the fourth quarter of 2032. To reiterate, this doesn’t mean the program will be bankrupt or unable to pay benefits. As long as Americans continue to work, the 12.4% payroll tax on earned income (Social Security’s primary funding source) will enable payouts to eligible beneficiaries. But a full depletion of the OASI’s asset reserves would confirm that the existing payout schedule, including annual cost-of-living adjustments (COLAs), isn’t sustainable.
If lawmakers fail to address this looming funding shortfall, sweeping benefit cuts of up 22% may await retired workers and survivors of deceased workers in just six years.
While demographic shifts are primarily responsible for this funding deficiency, decisions made by President Trump are estimated to have accelerated the timeline to sweeping benefit cuts.
Image source: Getty Images.
Trump’s policies are speeding up the timeline for Social Security benefit cuts
Most of Social Security’s long-term unfunded obligations can be traced to factors such as baby boomers retiring, increased longevity, a decline in net legal migration into the U.S., a historically low U.S. birth rate, and rising income inequality. But make no mistake, Donald Trump has had a hand in Social Security’s worsening financial outlook.
For starters, the president’s flagship tax and spending law of his second term, the “Big, Beautiful Bill,” or BBB, isn’t helping America’s leading retirement program.
The BBB introduced a laundry list of tax breaks, many of which are temporary from tax years 2025 through 2028. This includes the “senior deduction,” “no tax on tips,” and “no tax on overtime,” among others.
Although these credits and deductions are helping some taxpayers retain more of their income and/or benefits, the BBB is depriving Social Security’s primary funding source of income. Specifically, these tax breaks have reduced the earned income subject to the 12.4% payroll tax.
Shortly after the BBB was signed into law by President Trump, the ranking member of the Senate Banking Committee, Sen. Ron Wyden (D-OR), requested an analysis of how it would impact Social Security. In early August, the Social Security Administration’s Office of the Actuary responded to Wyden’s request, estimating an added $168.6 billion in costs to the program from 2025 to 2034.
Additionally, the Iran war can have a negative impact on Social Security.
BREAKING: May CPI inflation rises to 4.2%, the highest level since April 2023.
Core CPI inflation also rises to 2.9%, the highest since September 2025.
Inflation in the US is officially back above 4% and more than double the Fed’s target.
Odds of Fed rate hikes are rising.
— The Kobeissi Letter (@KobeissiLetter) June 10, 2026
On Feb. 28, Trump gave the green light for the U.S. military to commence attacks on Iran. Shortly thereafter, Iran shut down the Strait of Hormuz to virtually all commercial vessels, effectively stymying the flow of 20 million barrels of petroleum liquids per day. This action caused energy prices to skyrocket, sending the trailing 12-month U.S. inflation rate from a modest 2.4% in February to 4.2% in May.
Social Security’s annual cost-of-living adjustment aims to boost benefits on par with inflation. The faster prices are increasing, the larger the COLA passed on to beneficiaries.
Independent estimates for Social Security’s 2027 COLA have soared in recent months. Nonpartisan senior advocacy group The Senior Citizens League estimates a 3.8% raise next year, while independent Social Security and Medicare policy analyst Mary Johnson foresees a 4.7% COLA in 2027.
Though a larger benefit probably sounds great on paper, it threatens to drain the OASI’s asset reserves even faster than the Trustees have modeled. An estimated 4.7% COLA would be the fourth-highest over the last 36 years, and it could further accelerate the timeline to sweeping benefit cuts.
While demographic shifts are at the heart of Social Security’s financial woes, Trump’s policies aren’t doing the program any favors.
