Social Security Trust Fund Depletion Accelerated by Trump Budget Bill, Experts Advise Caution

Social Security Trust Fund Faces Earlier Depletion Amid New Budget Legislation

Concerns about the longevity of Social Security are intensifying, especially among younger Americans. According to a recent NerdWallet survey, 36% of individuals under 65 doubt the program will be accessible when they retire. This skepticism is compounded by the disappearance of traditional pension plans, with only 8% of workers aged 18 to 29 covered by defined benefit pensions as of 2023, according to Federal Reserve data.

Accelerated Trust Fund Exhaustion

The Social Security Administration (SSA) annually updates projections for the depletion of its trust fund, which finances retirement benefits. The latest forecast, released in June 2025, estimated exhaustion by 2033, after which Social Security could only cover approximately 77% of promised benefits. However, the passage of President Donald Trump’s 2025 budget bill, enacted on July 4, has expedited this timeline. Karen Glenn, Chief Actuary at the SSA, indicates the trust fund may be depleted by the end of 2032.

Experts emphasize that while Social Security is unlikely to disappear entirely, beneficiaries should prepare for potential benefit reductions. Sam Taube, investing writer and spokesperson for NerdWallet, notes, “We’re not currently looking at a scenario where the program just goes away. But some degree of a haircut is pretty likely at this point.”

Understanding Social Security Benefits

Social Security operates through payroll taxes levied on earnings up to $176,100 for 2025, with both employees and employers contributing 6.2% of wages. These funds accumulate in a trust used to pay monthly benefits to retirees, survivors, and disabled individuals. Benefits are calculated based on the highest 35 years of earnings and vary depending on the age at which beneficiaries claim them. Full retirement benefits begin at age 67 for those born in 1960 or later, with early claims reducing payments and delayed claims increasing them by 8% annually up to age 70.

Potential Policy Responses and Planning Recommendations

Given the funding shortfall, policy adjustments are anticipated. Catherine Collinson, president and CEO of the Transamerica Institute, outlines possible approaches: “They’ll have to change the benefit formula, raise the payroll tax, or increase the full retirement age—which is currently 67, among the highest globally.” Failure to enact reforms could result in uniform benefit reductions.

Financial experts advise individuals to take proactive steps:

• Access Your Social Security Statement: Creating an account on the SSA website allows individuals to review estimated benefits based on current earnings and understand how claiming age affects payments.
• Evaluate Retirement Readiness: Use retirement calculators to project savings growth and combine this with Social Security estimates to assess if your anticipated income will sustain your desired lifestyle. Consulting a financial advisor can help model scenarios including possible benefit cuts or program alterations.

Phillip Battin, president and CEO of Ambassador Wealth Management, emphasizes comprehensive scenario planning: “Planning for every scenario is the only way to have true peace of mind.”

Conclusion

While Social Security remains a critical component of retirement income for many Americans, its financial challenges necessitate careful planning. Individuals should monitor updates from the SSA, understand their benefit projections, and prepare for potential adjustments in the program’s structure or payouts.