Social Security’s Funding Problem Just Got $169 Billion Worse

Millions of older Americans today collect Social Security. And without those monthly benefits, many would struggle to pay their bills.

In fact, as it is, many Social Security recipients are having a hard time making ends meet. But now, the threat of benefit cuts looms, which is no doubt causing seniors immense stress.

The reason Social Security is at risk of cuts in the near term boils down to a funding shortage. The program’s main source of revenue is payroll tax collection. In the coming years, Social Security is expected to see that revenue source shrink as baby boomers retire in droves.

Once Social Security’s trust funds run out of money, benefit cuts may be inevitable unless lawmakers act. But a recent legislative change has put Social Security in an even more precarious financial situation.

The OBBBA is piling onto the problem

As part of his campaign, President Trump pledged to get rid of taxes on Social Security benefits. He didn’t quite achieve that goal, but he did introduce a new $6,000 senior tax deduction as part of the One Big Beautiful Bill Act (OBBBA). As a result of the new tax deduction, the majority of Social Security recipients are not expected to owe taxes on their benefits.

That’s a good thing for seniors’ budgets in the near term, but it’s not a good thing for Social Security. That’s because in addition to payroll tax revenue, Social Security relies on taxed benefits for funding. The loss of that funding could push the program even closer toward insolvency.

An August 2025 letter from the Chief Actuary of the Social Security Administration to Senator Ron Wyden confirms that the OBBBA is estimated to increase the cost of the Social Security program by approximately $169 billion over the 10-year period from 2025 through 2034. That’s an increase Social Security can’t afford.

Are Social Security cuts inevitable?

Social Security is looking at a strong possibility of benefit cuts in the next few years, but only if lawmakers don’t act. The problem is that the solutions to prevent Social Security cuts aren’t necessarily great.

Raising the payroll tax rate could be a financial lifeline for Social Security. But it would come at the expense of higher taxes for workers.

There are other options, too, like forcing workers to wait longer before becoming eligible for their benefits in full. But there’s a clear downside to that, too.

All told, lawmakers don’t have an easy job ahead of them. But the OBBBA certainly didn’t help things.

How to prepare

If you’re worried about Social Security cutting benefits, do know that it’s not a given. But also don’t ignore the possibility of broad benefit cuts. Instead, plan for them.

If you’re still working, the best thing to do is build savings. The more you have, the less reliant on Social Security you’re apt to be once your career comes to an end.

If you’re already receiving benefits, try to save a portion (though that may be easier said than done). And look at ways to increase your income, whether it’s working part-time or renting out space in your home.

Social Security cuts may be even more likely thanks to the OBBBA. While certain provisions were meant to help seniors, some near-term relief could set the stage for longer-term pain.