Millennials will have Social Security. The program is not going bankrupt and is not disappearing. It does face a real funding shortfall: without congressional action, the retirement trust fund’s reserves are projected to run out in 2033, after which incoming payroll taxes would still cover roughly 77 cents of every dollar in scheduled benefits.1Social Security Administration. 2025 OASDI Trustees Report That’s a pay cut, not an elimination, and it’s a problem Congress has the tools to fix.
What 2033 Actually Means
The retirement side of Social Security, the Old-Age and Survivors Insurance (OASI) Trust Fund, has been paying out more than it takes in for several years. The 2025 Trustees Report projects that OASI reserves will be depleted in 2033. Combined with the separate Disability Insurance fund (which is healthier and isn’t projected to run dry within the next 75 years), the depletion date moves to 2034.1Social Security Administration. 2025 OASDI Trustees Report
Depletion of reserves is not the same as the program running out of money. Social Security operates primarily as a pay-as-you-go system: today’s workers fund today’s retirees through payroll taxes collected every pay period. Even if the reserves hit zero, that payroll tax revenue keeps coming in. The reserves are a cushion built up over decades when payroll tax collections exceeded benefit payments, held as special Treasury bonds. They are shrinking as baby boomers retire in large numbers and birthrates have declined, but they were never the main source of funding.
The Size of the Pay Cut If Nothing Changes
If the OASI fund runs dry in 2033 and Congress does nothing, ongoing payroll tax collections alone would cover 77% of scheduled retirement benefits. Under the combined OASDI scenario, the figure is 81% at the point of depletion, gradually declining to about 72% by 2099.2Social Security Administration. Summary of the 2025 Annual Reports
In practical terms, a millennial scheduled to receive $3,000 per month at full retirement age might instead receive roughly $2,310 to $2,430 under that reduced-payment scenario. That’s a meaningful cut. It’s also nowhere near zero. The system is legally prohibited from paying more than available funds without new legislation, so the real question is whether Congress closes the gap before or after the reserves are exhausted, not whether millennials will get Social Security at all.
How Congress Could Close the Gap
The Social Security Administration’s Office of the Chief Actuary has scored dozens of legislative proposals that would extend the program’s solvency. Most fall into a handful of categories.3Social Security Administration. Summary of Provisions That Would Change the Social Security Program
- Raising or eliminating the wage cap. Earnings above the Social Security wage base ($184,500 in 2026) are currently exempt from the 6.2% payroll tax. Taxing all earnings at the full 12.4% combined rate would close a large portion of the shortfall on its own.
- Raising the retirement age. Proposals range from gradually increasing full retirement age to 68 or 69, with some also pushing the earliest claiming age from 62 to 64.
- Adjusting the benefit formula. Some proposals would change how cost-of-living adjustments are calculated or modify the formula that converts lifetime earnings into monthly benefits.
- Increasing the payroll tax rate. Rather than the current 6.2% each for employee and employer, rates could rise by fractions of a percent over several years.
No comprehensive solvency package has been enacted in decades, but Congress has done this before. The last major reform, in 1983, gradually raised the full retirement age from 65 to 67, which is the change that now applies to millennials. Political pressure to act tends to build as the depletion date approaches.
What Millennials Will Actually Receive
For every millennial, meaning anyone born between 1981 and 1996, full retirement age is 67. That’s the age at which you get your full calculated benefit with no reduction and no bonus.4Social Security Administration. Benefits Planner – Retirement Age and Benefit Reduction
You can claim as early as 62, but your monthly check shrinks permanently. The reduction is 5/9 of 1% for each of the first 36 months before FRA, and 5/12 of 1% for each additional month beyond that.5Social Security Administration. Benefit Reduction for Early Retirement Claiming at 62 with an FRA of 67 means a 30% cut. A benefit that would have been $2,000 at 67 becomes $1,400 at 62, for life.4Social Security Administration. Benefits Planner – Retirement Age and Benefit Reduction
Delaying past 67 earns delayed retirement credits of 8% per year, up to age 70.6Social Security Administration. Early or Late Retirement Waiting from 67 to 70 increases your benefit by 24%. After 70, there is no additional bonus.
Earning Enough Credits to Qualify
To qualify for retirement benefits at all, you need 40 work credits, which is roughly ten years of covered employment. You can earn up to four credits per year; in 2026, each credit requires $1,890 in covered earnings, so $7,560 in annual earnings gets you the maximum four credits for the year.7Social Security Administration. Social Security Credits and Benefit Eligibility These thresholds adjust annually with average wage growth.
Part-time workers, freelancers, and gig workers can accumulate credits too; there’s no requirement that income come from a single employer or be spread evenly across the year. Your benefit is then based on your 35 highest-earning years, adjusted for national wage growth. If you worked fewer than 35 years, zeros fill the gap and drag your average down significantly.8Social Security Administration. Social Security Benefit Amounts
You can check your credit count and earnings record by creating a my Social Security account at ssa.gov. It’s worth reviewing every year or two to catch errors, because the SSA generally has only about three years, three months, and 15 days from the year earnings were received to correct mistakes, after which they become much harder to fix.
What You Pay In
Under the Federal Insurance Contributions Act (FICA), you and your employer each pay 6.2% of gross wages toward Social Security, for a combined 12.4%.9Social Security Administration. FICA and SECA Tax Rates If you’re self-employed, you pay the full 12.4% under the Self-Employment Contributions Act (SECA), though you can deduct the employer-equivalent half when calculating your income tax.10Social Security Administration. What Are FICA and SECA Taxes
These taxes apply only up to the Social Security wage base, $184,500 in 2026.11Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet Every dollar earned above that cap is exempt from the 6.2% Social Security tax and doesn’t count toward your future benefit either. Medicare’s 1.45% tax has no cap.
Inflation Protection, and Its Limits
Social Security benefits are adjusted annually for inflation through a Cost-of-Living Adjustment (COLA). The SSA calculates it by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter of the current year to the same quarter of the last year a COLA took effect. For 2026, the COLA was 2.8%.12Social Security Administration. Latest Cost-of-Living Adjustment
These adjustments help benefits keep pace with rising prices, though imperfectly. The CPI-W tracks spending by working-age households rather than retirees, who tend to spend more on healthcare. Some legislative proposals would switch to a retiree-specific index, but none have been enacted.
Taxes and Medicare Will Cut Into Your Check
Social Security benefits can be subject to federal income tax. Whether yours are taxed depends on your “combined income,” which is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. The thresholds are set by statute and have never been adjusted for inflation since they were enacted in the 1980s and 1990s.13Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
For single filers, combined income between $25,000 and $34,000 makes up to 50% of benefits taxable; above $34,000, up to 85% is taxable. For married couples filing jointly, the corresponding brackets are $32,000 to $44,000 and above $44,000.
Because these dollar thresholds are frozen in nominal terms, inflation pushes more retirees into taxable territory every year. By the time millennials start collecting in the 2040s, the vast majority of beneficiaries with any supplemental income will likely be paying tax on their benefits unless Congress changes the law. A temporary provision enacted in 2025 through the One Big, Beautiful Bill Act eliminates Social Security benefit taxation for most current seniors through 2028, but that provision expires decades before millennials reach retirement age.14The White House. No Tax on Social Security Is a Reality in the One Big Beautiful Bill A small number of states also tax Social Security benefits, though most exempt them or offer generous retiree deductions.
One more deduction catches new retirees off guard: Medicare Part B premiums are typically pulled directly from your Social Security check before it reaches your bank account. In 2026, the standard Part B premium is $202.90 per month, with higher earners paying more through income-related surcharges.15Medicare.gov. 2026 Medicare Costs When you look at benefit estimates on your Social Security statement, the actual deposit will be smaller once Medicare and any tax withholding come out.
The Practical Takeaway
Social Security will be there for millennials. Whether it pays 100% or 77% of what’s currently scheduled depends on what Congress does over the next decade. Either way, the smart move is the same: check your earnings record annually through my Social Security, aim for at least 35 years of covered work, and treat the benefit as one leg of a retirement plan rather than the whole thing.