Social Security is not going bankrupt, but the sustainability of its existing payout schedule is facing serious and growing pressure from multiple directions.
More than 91% of Social Security’s income comes from the 12.4% payroll tax on earned income, meaning payments will continue as long as Americans remain employed.
The real concern is the projected depletion of the Old-Age and Survivors Insurance trust fund, known as the OASI, which pays monthly benefits to retired workers and survivors of deceased workers.
The 2025 Trustees Report predicted that the OASI’s asset reserves would be depleted by 2033, triggering an estimated 23% sweeping cut to payouts at that point.
Trump’s flagship tax and spending legislation, the “Big, Beautiful Bill,” introduces several temporary tax cuts between 2025 and 2028 that reduce the amount of earned income exposed to the payroll tax.
Those provisions include a $6,000 senior deduction for eligible individuals aged 65 and older, a no-tax-on-tips deduction of up to $25,000, and a no-tax-on-overtime deduction of up to $12,500.
An August 2025 estimate from the Social Security Administration’s Office of the Actuary found the Big, Beautiful Bill will increase program costs by $168.6 billion over ten years and shift the OASI depletion timeline forward by one quarter, to the fourth quarter of 2032.
Trumpflation poses a second and separate threat to the OASI’s financial stability, operating through a different mechanism than the tax legislation.
Trump instituted sweeping global tariffs in early April 2025, and although the U.S. Supreme Court struck them down in February 2026, those tariffs modestly lifted U.S. inflation during 2025.
A further inflation shock followed after the president’s decision to attack Iran on February 28, which led Iran to close the Strait of Hormuz, disrupting approximately 20 million barrels per day of petroleum liquids, or roughly 20% of global crude oil demand.
Trailing 12-month inflation stood at 2.4% in February before jumping to 3.8% by April, with the Cleveland Fed’s Inflation Nowcasting tool projecting it would approach 4.2% for May.
Higher inflation translates directly into larger Social Security cost-of-living adjustments, meaning beneficiaries are on track to receive notably bigger checks in 2027.
However, because the OASI’s annual outlays already outweigh its income, progressively larger cost-of-living adjustments driven by tariffs and the Iran war threaten to drain its asset reserves even faster.
The combination of the Big, Beautiful Bill’s payroll tax reductions and Trumpflation-driven cost-of-living increases represents a compounding financial pressure on an already deteriorating program outlook.
The 75-year unfunded obligation for Social Security stood at $25.1 trillion in 2025, a figure that risks growing larger as both legislative and inflationary forces continue to work against the program’s long-term balance.
