For most retirees, Social Security is more than just a monthly payment — it’s the foundation of their retirement income and a key factor in managing their expenses.
Since 2002, Gallup has surveyed retirees to understand the importance of Social Security in their financial lives.
Every year, between 80% and 90% of retirees report that their Social Security benefits are necessary to cover their expenses.
This makes protecting and strengthening Social Security a top priority for lawmakers — including President Donald Trump. However, the program is facing serious challenges.
Although Trump has mostly stayed away from making major changes to Social Security, his recent actions suggest that two key adjustments could happen in 2025.
Social Security Could Face Major Cuts by 2033
To understand the potential changes coming to Social Security, it’s important to know how the program ended up in financial trouble.
Since the first Social Security check was issued in January 1940, the Social Security Board of Trustees has published an annual report detailing the program’s income and expenses.
These reports also provide long-term forecasts based on changes in economic policy and population trends.
For the past 40 years, these reports have predicted a long-term funding shortfall. In 2024, this shortfall grew to $23.2 trillion.
The biggest concern is that the Old Age and Survivors Insurance Trust Fund (OASI) could be completely depleted by 2033.
Social Security isn’t at risk of bankruptcy because over 91% of its funding comes from a 12.4% payroll tax on earned income.
However, if the trust fund runs out, monthly benefits for retirees and survivors could be reduced by 21%.
The funding issues are largely due to shifting demographics. Myths about congressional theft or undocumented immigrants are common, but the real causes include rising income inequality, low birth rates, and a drop in legal immigration.
Trump’s Expected Social Security Changes in 2025
During his campaign and after winning the 2024 election, Trump promised not to cut Social Security benefits. However, his actions suggest that two major changes are likely in 2025.
1. Efficiency-Based Cost Reductions
While Trump isn’t planning to reduce Social Security benefits directly, he has indicated that efficiency-based cost cuts are coming.
In a December interview on Meet the Press, Trump stated, “We’re not touching Social Security, other than making it more efficient. But the people are going to get what they’re getting.”
Trump’s budget proposals during his first term included plans to reduce Social Security costs through efficiency improvements:
- $72 billion in savings from 2018 to 2027
- $64 billion in savings from 2019 to 2028
- $26 billion in savings from 2020 to 2029
- $24 billion in savings from 2021 to 2030
One notable proposal involved cutting retroactive benefits for workers with disabilities from 12 months to six months.
Since returning to office, Trump has signed an executive order requiring federal agencies to cut costs and reduce staff.
The Social Security Administration (SSA) is expected to eliminate 7,000 jobs, reduce its workforce to 50,000, and close some office locations.
However, administrative costs make up only a small part of Social Security’s expenses — about $7.2 billion out of the $1.392 trillion spent in 2023.
This means that cutting staff and closing offices won’t significantly reduce the $23.2 trillion funding gap or prevent the trust fund from running out in 2033.
2. Tariff Policy Could Impact the 2026 COLA
Trump’s second major change to Social Security involves the program’s cost-of-living adjustment (COLA) — the annual increase meant to keep benefits in line with inflation.
Trump’s plan to impose tariffs on certain goods imported from Canada, Mexico, and China could raise inflation in 2025, which would affect the 2026 COLA.
Tariffs are taxes on imported or exported goods, intended to protect American jobs and encourage domestic production. However, they can also drive up consumer prices.
There are two types of tariffs:
- Output tariffs – Taxes on finished products, which may give U.S. manufacturers a competitive edge.
- Input tariffs – Taxes on imported materials used to produce finished goods. These can increase production costs and lead to higher prices for consumers.
For example, most U.S. auto manufacturers import parts to build cars. If those parts face tariffs, production costs and car prices will rise, contributing to inflation.
Social Security’s COLA is based on inflation. If inflation rises because of Trump’s tariffs, the 2026 COLA would increase accordingly.
However, even if the 2026 COLA rises, it might not keep pace with the actual costs seniors face. Retirees tend to spend more on housing and healthcare, which have been increasing faster than the overall inflation rate.
Unless the 2026 COLA exceeds the inflation rate for housing and healthcare, seniors may still experience a decline in purchasing power.
What It Means for Retirees?
While Trump’s proposed changes may improve efficiency and boost COLA adjustments, they aren’t likely to fix Social Security’s long-term funding issues.
Retirees could see higher benefits due to inflation adjustments, but rising costs for housing and healthcare may offset these increases.
Protecting Social Security’s future will likely require more significant reforms — and it remains to be seen whether Trump and Congress will take action before the trust fund runs dry in 2033.
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