In 1960, five people paid into Social Security to fund each beneficiary. That number fell to 2.8 last year. By mid-century, it will be closer to two.
Payroll deductions will provide some money for Social Security benefits for decades. However, that payment system and its financials will be strained. The “covered workers per OASDI beneficiary” could also change over the next few decades. Among the reasons are the rate at which people die, the age at which people begin taking their payments, inflation, tax rates, and the taxation of the benefits themselves. Eventually, even fertility rates and the pace at which people are born could have an effect.
All this goes into the Social Security Administration’s forecasts. These the same forecasts determine when Social Security will “run out of money” in 2032 or 2033. At that point, payouts could decrease to 77% of current levels. However, the 2025 OASDI Trustees Report says, “The Trustees will continue to monitor developments, reevaluate the assumptions, and modify the projections in later reports.” In other words, they don’t know what they don’t know.
Several factors are difficult to pin down. A long and deep recession changes the valuation. At the low point of the 2007–2009 Great Recession, unemployment hit 10.1% in October 2009. Over the past three years, the average jobless figure has been closer to 4%. Recessions often also mean lower wages. The analysis does not mention whether or how hard artificial intelligence hits the workforce.
Of course, Congress could act to prevent a reduction in benefits in 2032. However, they are not inclined to do so. If voters turn against them for a lack of action, lawmakers could change their minds in a few years.
The point is, no one can predict what payouts will be after 2040. Will they stay at 77%? This depends on many factors and the assumptions about each one.
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