Social Security Will Change Before We All Retire — Here’s What’s Likely to Happen First

Key Takeaways

• President Biden’s budget proposal for 2024 makes some attempts at strengthening Social Security
• Monthly payments will likely change for 2025
• By about 2034, Social Security will be unable to pay scheduled benefits in full

Social Security isn’t a static benefit. It changes over time based on political attitudes, economic factors, and shifts in the workforce. Even if you feel far from hanging up your hat, it’s important to keep an eye on what’s likely to happen with retirement benefits today, tomorrow, and years from now.

Let’s get into the latest below.

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What’s happening with Social Security

A 2024 budget proposed by The White House includes additional funding for Social Security and Medicare beneficiaries. At the same time, this is a summer of high inflation and debt, which has some policymakers supporting cuts across the board — including to Social Security.

President Biden has said he will reject any proposals that make outright Social Security cuts, but that doesn’t mean certain changes are off the table in the near and medium term.

On the table per Biden’s 2024 budget proposal: new Medicare taxes for high-income earners and wealthy taxpayers, an increased annual operating budget for the Social Security Administration to improve customer service, and national paid family and medical leave, among other initiatives.

Outside of Biden’s proposal, cost of living and inflation also impact Social Security year over year.

What changes might impact my retirement?

That definitely depends on how close you are to retirement. If you’re collecting Social Security this year, good for you! The maximum monthly payout has risen by $282 this year.

By 2025, the monthly Social Security payment will change because of the annual cost-of-living adjustment (COLA). This year’s COLA of 8.7% is the highest in more than 40 years, for example, while the COLA in 2024 will likely be smaller as inflation eases. Biden’s proposal for the year includes a change to how COLA is calculated to put more money into the hands of retirees.

The maximum benefit will probably increase by 2025 as well — again, this is because of inflation. Remember: You’re only eligible for the maximum if you contribute the maximum through payroll taxes during your working years, so you might want to double check that sooner than later.

Not to alarm anyone, but in about a decade, Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund is expected to run out of funds. When that happens, the program will be 100% dependent upon payroll taxes for funding, which only covers about 77% of current benefits.

The bottom line

Even if Biden says he’ll veto any immediate Social Security cuts, we can’t bank on that forever.

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