This Single Statistic Proves Social Security Is Running Out of Money Faster Than Planned
Social Security's financial window is closing faster than most Americans realize, and one little-discussed ratio explains exactly why a 22% benefit cut may be unavoidable unless Congress acts soon.
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There are millions of Americans today who count on Social Security for retirement income. But the program is facing a major financial crisis that could soon result in steep benefit cuts.
The Social Security Trustees project that the program’s Old-Age and Survivors Insurance (OASI) Trust Fund will only be able to pay 100% of scheduled benefits through the fourth quarter of 2032. Once the OASI Trust Fund runs out, Social Security may have to slash benefits by 22%. And there’s a key statistic that’s driving those potential cuts.
The ratio of workers to beneficiaries is shrinking
Social Security’s primary source of revenue is payroll tax income. Workers pay taxes on up to a certain amount of wages every year. This year, it’s $184,500. The Social Security tax rate is 12.4%, split evenly between employers and employees (though the self-employed pay the full amount).
The problem is that the labor force is shrinking. And because of that, Social Security is looking at a serious funding shortfall.
The Peter G. Peterson Foundation explains that back in 1955, there were 8.8 workers per OASI beneficiary. However, that ratio fell to just 3 workers per beneficiary in 2025.
Furthermore, in 1975, Social Security had $57 billion in revenue but $60 billion in expenses, which means the program was already running at a deficit more than 50 years ago. But by 2025, the shrinking ratio of workers to beneficiaries grew that deficit to $262 billion, up from $3 billion five decades ago.
The reason the labor force is shrinking boils down to declining birth rates and immigration. In 1960, the average number of children born to a woman was 3.6. But by 2024, that number was down to 1.6.
Meanwhile, stricter policies have slowed down the immigration rate to the U.S. But immigrants tend to be younger, have higher birth rates, and have higher workforce participation rates. So all told, these trends are causing Social Security to lose out.
Since the number of retirees is expected to increase and the number of workers is not expected to increase quickly enough, this harmful pattern is expected to continue. As a result, once Social Security’s OASI Trust Fund runs out of money, the program will lose its cash reserves and will have to rely only on incoming revenue to keep up with benefits.
The result is an expected 22% benefit cut across the board unless lawmakers are able to implement changes that prevent one. Congress has never allowed Social Security to cut benefits in the past. But the program now faces unique challenges that may be difficult to overcome.
It’s best to prepare for Social Security cuts
Social Security cuts are by no means a given. Congress could vote to raise taxes to pump more money into Social Security. Lawmakers could also make changes to the program’s full retirement age and take other steps to try to boost program revenue.
But all told, if you’re still working, it’s best to prepare for Social Security cuts in case they aren’t preventable. And one of the best ways to compensate for smaller benefits is to save aggressively.
Funding an IRA or 401(k) consistently could allow you to build a large nest egg, even if you aren’t parting with a whole lot of money each month. And if you have savings to supplement your Social Security checks, you may find that your retirement plans don’t have to change very much even if benefits do end up facing a 22% cut.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
