The $18,000 Warning Sign: How Social Security's Funding Gap Threatens Your Retirement

If you're married and retired or about to retire, you and your spouse could begin losing more than $18,000 per year in Social Security benefits if Congress fails to shore up the solvency of the trust fund for the retirement benefit program by 2033, according to Barron's.

The cut in your earned retirement benefits could be compounded by the Medicare Hospital Insurance fund also depleting by the end of 2032, forcing an 11% reduction in Medicare payments, unless Congress acts, Barron's reports.

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That could reduce access to healthcare for you, your spouse and about 69 million U.S. Medicare recipients. About 70 million Americans receive Social Security benefits, and 40% of older Americans rely on the benefits for the majority of their income.

What the Funding Gap Suggests for Your Retirement Planning

Estimates from the Committee for a Responsible Federal Budget, which assessed the trust funds and CRFB's own projections and the impact of the One Big Beautiful Bill Act, formed the basis for Barron's report. By law, the funds for Social Security and Medicare must rely only on incoming revenue once reserves are depleted, leading to an automatic 24% reduction in Social Security benefits in the first year by 2033.

While Social Security Trustees' annual 2025 report suggests a slightly better timeline, the potential cuts without action by Congress leave it up to pre-retirees and retirees to adjust their plans. Yet, according to the Allianz Center for the Future of Retirement, 55% of Americans don't understand Social Security or how it fits into their plans.

"A financial professional can help educate you on Social Security and how it could fit into a retirement income plan for you," Kelly LaVigne, vice president of consumer insights for Allianz Life, said in a statement.

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A Long-Standing Concern

Benefits account for nearly half of all income in households headed by someone at least age 62, Barron's reported. The outlet cited a 2025 report from the Center on Budget and Policy Priorities, showing 22 million Americans would fall below the poverty level if they didn't receive Social Security benefits.

This program, which also supports the disabled and families of deceased workers, has flirted with insolvency for some time. Congress adjusted the program in 1983, and more recently, payouts from Social Security have outstripped revenue each year since 2021, Barron's said. In 2024, the program lost $67 billion, according to the Social Security Administration.

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How the Cuts May Impact You

The CRFB's projections of potential cuts in 2033 are slightly higher than the Social Security Trustees' report. The Social Security Trustees' report estimates a 21% cut in benefits without a solution, while the CRFB estimates a 24% reduction because of tax rate cuts and an increase in the senior standard deduction adopted with the One Big Beautiful Bill Act.

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The Effect of the One Big Beautiful Bill Act

The gap between what Social Security takes in and pays out is expected to worsen. The tax policy changes from the One Big Beautiful Bill Act trimmed future revenue, and the number of workers paying into the system has fallen over the years. It is expected to fall to less than 2.2 workers per Social Security recipient by 2035, according to the Peter G. Peterson Foundation. In 1960, there were 5.1 workers per recipient.

What Could Lie Ahead

To keep the Social Security trust fund solvent, Congress can raise taxes, reduce benefits or both.

Congress could lower payouts by cutting benefits or lowering the cap on cost-of-living increases. It could also raise the full retirement age above 67, allowing people who work longer to contribute longer.

Tax hikes are likely, and that cuts and a tax hike may both be necessary. However, the question for Congress is who gets hit — the rich or the poor, according to Barron's.

Whichever way Congress goes, acting sooner rather than later is a benefit. Having certainty can help those planning to retire, Wendell Primus, a visiting fellow at the leading think tank The Brookings Institution, told Barron's.

"When Congress has its back to the wall and knows that if they don't do something, they're going to get political pain, they'll respond," Primus said.

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