Social Security

The Social Security trust fund has been paying out more in benefits than it collects in employee taxes since 2010, and it is projected to run short of money by 2033. One proposal to replace the current government-administered system is the partial privatization of Social Security, which would allow workers to manage their own retirement funds through personal investment accounts.  [3] [60] [31] [29] [9]

History and structure of Social Security

President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935, creating the Social Security program. The program provided a social insurance system based on the idea that if workers pooled a portion of their wages, they would be able to protect one another and their families against wage loss due to retirement. Through this national benefits program, Social Security made available a basic level of monthly income to workers who paid into the system. [61] [62]

Although benefits were initially restricted to workers aged 65 and older, the program expanded over time and is now also known as the Old-Age, Survivors, and Disability Insurance program (OASDI). In 1939, benefits were introduced for spouses and minor children of retired workers, and “survivors benefits” could be paid to the family of a worker who died prematurely. Benefits for disabled workers were added in 1956, and the minimum age at which workers became eligible for old-age insurance payments was lowered to 62 for women in 1956 and for men in 1961. [63] [64]

A 1983 Social Security Amendment included a tax on benefits for the first time—50 percent of Social Security benefits became subject to taxation for individuals with an income of $20,000 or more—and raised the full-benefit retirement age from 65 to 67. [11]

Social Security benefits were initially intended to supplement pensions and personal savings for retirees. However, Social Security payments have become the primary retirement plan for many Americans. The percentage of American workers with employer-funded benefit pension plans declined from 39 percent in 1980 to 20 percent in 2007. [11]

By 2014, 22 percent of married retirees and about 47 percent of unmarried retirees were relying on Social Security for 90 percent or more of their income. About 59 million people were receiving Social Security benefits by the end of 2014: 42 million retired workers and their dependents, 11 million disabled workers and their dependents, and 6 million surviving relatives of deceased workers. [3] [66]

Social Security does not maintain individual savings accounts for each worker but operates as a pay-as-you-go system, in which each generation of workers supports the preceding generation’s retirees. In 2015, U.S. citizens had 6.2 percent of their earnings (up to $118,500) taken out as Social Security Federal Insurance Contribution Act (FICA) taxes, which are commonly referred to as payroll taxes. Employers also paid 6.2 percent of each employee’s earnings (up to $118,500), for a total contribution into Social Security of 12.4 percent. Individuals can begin collecting reduced retirement benefits at age 62, and full retirement benefits can be claimed at the age of 67. [54] [67]

Although the Social Security Act entitles workers to receive benefits, these benefits are not guaranteed by law. The federal government does not have a legal liability to pay retirees the money they paid into the system over their working careers, and Congress can change the rules regarding benefit eligibility at any time. [24] [68]

According to Pew Research Center, 73.9 million people (more than a fifth of the U.S. population) were receiving Social Security benefits as of April 2025, including

• 52.6 million retired workers
• 2.7 million spouses and children of retired workers
• 5.8 million survivors of deceased workers
• 7.2 million disabled workers
• 1.1 million spouses and children of disabled workers
• 7.4 million receiving Supplemental Security Income

(Some people qualify for more than one type of Social Security benefit, so the above numbers will not total 73.9 million.)[6]

Social Security’s projected insolvency

Social Security was projected to have enough tax revenue to pay 79 percent of benefits owed in 2034. A budget shortfall of $10.7 trillion is expected through 2089. [3]

The 2020 Social Security Board of Trustees report indicated that, if no further action is taken, the program will be insolvent (i.e., unable to pay beneficiaries in full) by 2035, when the U.S. government will be able to pay about three-quarters of benefits. [29]

A May 6, 2024, Social Security Board of Trustees reports that retirees will only receive 83 percent of their benefits after 2035 if no changes are made to the system by the U.S. Congress. However, on December 21, 2024, Congress approved legislation to pay full social security benefits to certain public sector retirees (including teachers, firefighters, and police officers). That plan comes with a $196 billion price tag and is projected to speed up insolvency by six months. [20] [19]

As predicted, the June 2025 report to trustees stated that the program, which has about 61 million beneficiaries, will be insolvent by 2033, reducing benefits by 23 percent if Congress does not act. [9]

Several factors have been contributing to Social Security’s predicted insolvency, including the aging of the American population. Millions of post-World-War II baby boomers began reaching retirement age in 2011, in what has been called America’s “silver tsunami” (or “gray tsunami”); the fear is that this large wave of retirees will overwhelm healthcare provisions and the Medicare and Social Security systems; deflate the housing market as retirees sell their homes and downsize; cause a “brain drain” of institutional knowledge in many industries as workers exit the workforce; and increase the need for senior care. By 2030 all baby boomers will be more than 65 years old—an estimated 73 million people—and by 2034, older adults will outnumber people under age 18 for the first time in U.S. history. Life expectancy in the U.S. was 79.4 years in 2025, compared with 61.7 years in 1935 when the Social Security program began. [54] [70] [21] [8] [7]

Birth rates have fallen from more than three children per woman during the baby boom (1946–65) to 1.7 children per woman in 2019. To replace the baby boomer population, 2.1 children per woman would be needed. Because of this decline, the ratio of workers to beneficiaries has dropped significantly. In 1940 there were 159.4 workers for each beneficiary, but the ratio had fallen to 5.1 workers for each beneficiary by 1960, and by 2013 there were only 2.8 workers for each beneficiary. [1] [71] [21]

Brief history of the privatization debate

During the 1990s American politicians and think tanks began suggesting private investment accounts as one option to prevent the Social Security program’s impending financial difficulties. In January 1997 a report issued by the Advisory Council on Social Security offered three proposals to alter the program in an effort to ensure future solvency. The proposals all involved investing retirement contributions in the stock market. One of the plans envisaged the government investing money from a common pool, but the other two ideas specified the establishment of an individual account for each worker. One plan proposed publicly held individual accounts, and the other plan suggested private accounts. [68] [72]

A partial privatization of the program using private accounts gained support in the ensuing years, largely from Republican politicians and conservative think tanks but also from some moderate Democrats. While proposals differed, the unifying element was the notion of individual private retirement accounts, with a portion of each individual’s payroll taxes diverted from the trust fund to accounts similar to IRA or 401(k) plans. In late 1997 President Bill Clinton was reportedly in discussions with House Speaker Newt Gingrich (R-GA) to put forward a bipartisan proposal to reform Social Security by using private accounts, but the plan never went ahead. [73] [74] [75]

During the 2000 U.S. presidential campaign, Republican nominee George W. Bush ran on the promise of letting “younger workers take a portion of their payroll taxes and put it in the marketplace.” Bush’s Social Security reform proposal won considerable public support, and some commentators gave it partial credit for Bush’s eventual victory over Democratic nominee Al Gore. On May 2, 2001, Bush appointed a commission to examine his proposed changes to Social Security, but his first term was dominated by responses to the 9/11 attacks. Bush again touted personal accounts in his successful 2004 reelection campaign. However, after he was reelected, he revised his plan and called for future retirees’ benefits to be reduced by about 40 percent to prevent the trust fund from becoming insolvent. He also refused to rule out a raise in taxes to support the program’s restructuring. Public support for the proposal dropped, the influential retirees’ organization AARP lobbied against the idea, and Democratic opposition in Congress intensified. By late 2005 the plan had stalled and public discussion about privatization remained relatively dormant for several years. [76] [77] [78] [79] [80] [81]

Public opinion: 2011–15

In a September 2011 poll conducted by CNN/ORC International (formerly Opinion Research Corp.), 52 percent of adult American respondents favored the partial privatization of Social Security, and 46 percent opposed it. According to February 2014 polling by Pew Research, 51 percent of millennials and 50 percent of Gen Xers believed that Social Security would not be able to provide them with any benefits at all by the time they retired. In a January 2015 Gallup poll, 46 percent of those polled said they “personally worry about the Social Security system,” which is fairly consistent with polls taken regularly since 2005. An April 2015 Gallup poll found that 36 percent of American non-retirees expected Social Security to be a “major source” of their retirement income, the highest percentage in 15 years of polling. Gallup also found that the percentage of 18–34-year-olds who expected to rely on Social Security as a “major source” of their retirement income doubled between the periods 2005–06 and 2014–15, from 13 percent to 26 percent. [5] [22] [57] [55] [44]

2016–17 debate

Several 2016 Republican presidential candidates expressed their support for privatizing Social Security with personal accounts, including Rand Paul, Mike Huckabee, Rick Perry, and Ted Cruz. However, the debate in Washington, D.C., focused on how to change Social Security’s revenue and benefit structure to avoid insolvency. Some former supporters of private accounts shifted their positions to favor solutions including raising the retirement age, changing the Cost-of-Living Adjustment (COLA) formula, or cutting benefits. Other suggestions included removing the payroll tax cap on high earners, using the revenues to replenish the trust fund and increase the maximum benefit, introducing means-testing so that wealthy retirees would receive reduced or no benefits, and raising Social Security taxes. [69] [65] [59] [58] [34]

After 2017, the debate again went dormant. Politicians and think tanks have proposed other ways to resolve, reduce, or eliminate the Social Security program.

2025 onward

Going into his second term, President Donald Trump promised, “I will not cut a single penny from Social Security or Medicare, and I will not raise the retirement age by a single day.” To many Social Security recipients, “his commitment has been welcomed by those worried about potential benefit reductions.” How the Social Security system will remain solvent, however, remained a matter of concern, in part because Trump also promised to carry out mass deportations of undocumented immigrants, who collectively contributed $25.7 billion in Social Security taxes, according to recent estimates. Undocumented immigrants are not eligible to receive Social Security payments, meaning their payments into Social Security are something of a bonus. [18] [13]

On July 30, 2025, Treasury Secretary Scott Bessent briefly reignited the privatization debate by describing Trump Baby accounts (accounts with $1,000 for American babies born between July 4, 2025 through 2028) as “a back door for privatizing Social Security.” Bessent later clarified on X: “Trump Baby Accounts are an additive benefit for future generations, which will supplement the sanctity of Social Security’s guaranteed payments.”[2]

Assessment quiz

After reading the above debate, take our Money and Work quiz to test your knowledge of related issues. Good luck!

1-minute survey

After reading this debate, take our quick survey to see how this information affected your opinion of this topic. We appreciate your feedback.

Discussion questions

1. Should Social Security be privatized? Why or why not?
2. How should the U.S. government deal with the pending insolvency of Social Security? Explain your answer.
3. Should people who will not receive full Social Security benefits due to insolvency have to pay Social Security taxes now? Why or why not?
4. What questions do you have after reading the debate above? Where might you find answers?
5. What was the most interesting thing you learned from this debate?
6. Consider how you felt about the issue before reading this article. After reading the pros and cons on this topic, has your thinking changed? How and why?. If your thoughts have not changed, explain how and why you better understand the other side of the debate.
7. Push for the position and policies you support by writing local officials, U.S. senators and representatives, or other people in a position to make the change you champion.