T axpayers would be responsible for the losses if stock market returns fall short of borrowing costs under a bipartisan proposal to shore up Social Security.
Related Brief 3d ago
social security A $6,000 tax deduction for seniors just made Social Security's funding shortfall $169 billion worse
Millions of current and future beneficiaries face heightened uncertainty about the stability of their retirement income. That risk grew substantially after the One Big Beautiful Bill Act (OBBBA) introduced a $6,000 senior tax deduction. While the deduction reduces tax liability for most Social Security recipients, it also removes a key source of funding for the program itself. Social Security relies not only on payroll taxes but also on revenue generated from taxing benefits. With most recipients now expected to pay no tax on those benefits, that stream is drying up. An August 2025 letter from the Chief Actuary of the Social Security Administration to Senator Ron Wyden confirms the fiscal impact: the OBBBA will increase the program’s cost by approximately $169 billion over the 10-year period from 2025 through 2034. That’s not new spending—it’s a loss of incoming revenue at a time when the program is already strained by demographic shifts. Baby boomer retirements are reducing payroll tax inflows just as demand for benefits rises. The $169 billion gap makes trust fund depletion more likely, and with it, the prospect of automatic benefit cuts. Lawmakers could act to close the shortfall, but options like raising payroll taxes or delaying full eligibility carry political and economic costs. For now, the OBBBA’s near-term relief for seniors has come at the expense of the program’s long-term solvency.
Senators Bill Cassidy and Tim Kaine proposed a plan where the federal government would borrow $1.5 trillion over the next decade to create a new trust fund. This fund would be invested in equities and other risky assets for 75 years. During this period, the Treasury would continue to borrow additional funds to cover Social Security’s ongoing benefit shortfalls.
Related Brief 10h ago
social security Social Security payments for retirees born between the 11th and 20th are due April 15
Retirees born between the 11th and 20th of a month will receive their Social Security payments on Wednesday, April 15. This is the second of three April payment rounds. Retirees born on or before the 10th of a month received their payments on April 8. Those born on or on after the 21st of a month will receive their payments on April 22. Monthly payments are capped at $5,181. Amounts are determined by the years and amount of payroll tax paid into the system. Retirement age also determines the payment amount. A beneficiary retiring at 62 can receive up to $2,969 per month, while a retiree who waits until 70 receives up to $5,181 per month.
At the end of the 75-year period, the trust fund would repay the Treasury the original borrowed amount plus interest. Any remaining gains, based on the difference between Treasury interest rates and stock market returns, would be used to offset a portion of the government’s borrowing costs for Social Security benefits.
Related Brief 10h ago
social security reform Social Security's insolvency date moves up by two years — and a typical couple could lose $18,400 annually
A typical couple who turned 60 in 2025 could lose $18,400 per year in Social Security benefits if lawmakers fail to act. That’s the projected consequence of a two-year acceleration in the depletion of Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund, now expected to run dry by 2032. The shift — from a 2033 insolvency date projected by the Social Security Trustees — stems largely from the fiscal impact of the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025. The Social Security Office of the Chief Actuary has calculated that the OBBBA will drain $168.6 billion in revenue from the program between 2025 and 2034. A key driver: a new $6,000 senior tax deduction that reduces the number of beneficiaries paying taxes on their Social Security income, a direct hit to a secondary funding stream. The Congressional Budget Office and the Committee for a Responsible Federal Budget both confirm the updated 2032 insolvency timeline. The OBBBA also restricts immigration, a policy expected to shrink the U.S. workforce. Fewer wage earners mean lower payroll tax receipts — Social Security’s primary revenue source — compounding the shortfall. With demographic pressures from declining birth rates, the program faces a narrowing window for reform. The CRFB warns that without intervention, automatic benefit cuts will trigger a 24% reduction for a typical couple, a blow that would be worsened by potential Medicare reductions. Solutions exist — including a broader employer tax, adjustments to cost-of-living increases for higher earners, or raising the full retirement age — but they require time and political will. The terminal consequence is clear: a typical couple who turned 60 in 2025 would face an annual $18,400 reduction in benefits, a cut of approximately 24%.
Critics, including Alicia H. Munnell of the Center for Retirement Research at Boston College, argue the plan relies on aggressive borrowing and risky investment assumptions. Munnell noted that the federal debt is projected to rise from 101 percent of GDP to 120 percent by 2036. The proposal generates no new revenue for Social Security beyond borrowed money.
Related Brief 10h ago
social security A 2.8% Social Security COLA in 2027 would leave retirees falling behind
A 2.8% Social Security COLA in 2027 would leave retirees falling behind. The Senior Citizens League projects that cost-of-living adjustment will match the 2026 increase, delivering no improvement in purchasing power despite persistent inflation. A 2.8% inflation rate exceeds the Federal Reserve’s 2.00% target, eroding the value of fixed incomes. Social Security benefits are calculated using third-quarter inflation data, which currently points to that 2.8% adjustment. Retirees had hoped for a larger bump after post-pandemic COLAs reached as high as 8.7%. Instead, they face the same modest increase while Medicare premiums continue to rise. That means higher out-of-pocket costs without a corresponding boost in benefits. For seniors relying on conservative investment portfolios, the gap between inflation and income growth widens. Without recovery time from market downturns, they can’t afford to wait. A flat COLA forces difficult choices: reduce spending, delay withdrawals, or take on more investment risk. The 2.8% adjustment may keep pace with some price increases, but it doesn’t restore lost ground. Retirees must now prepare for another year where their benefits fail to catch up.
Taxpayers bear the risk of losses if returns fall short of borrowing costs.
Related Brief 21h ago
retirement planning Social Security eliminates pension-based reductions for public sector spouses
Some retirees and spouses are receiving higher monthly Social Security payments or lump-sum deposits for retroactive benefits dating back to 2024. This follows a rule change by the Social Security Administration that removes reductions to spousal and survivor benefits for those whose spouse worked in public sector jobs where Social Security taxes were not always paid. Previously, benefits were often reduced or eliminated if the spouse received a pension from that public sector work. The Social Security Administration is now recalculating benefits for eligible beneficiaries. Monthly increases range from a small amount to over $1,000 per month.
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