"Social Security Is Going Broke" — What the 2025 Trustees Report Actually Says

I had a guy raise his hand at the back of a Social Security workshop in Fall River last fall. Sixty-three years old. Arms crossed. He said, "Matt, I'm not going to wait. The system is going broke and I'm getting mine while I can." I get this question — or this statement, more often — at almost every workshop. The headlines have done their job. People believe the system is collapsing. People think claiming early is the smart financial move because at least they'll get something before the lights go out, right?

Here's what I told him, and what I want to walk you through in this article. The 2025 Social Security Trustees Report — the actual document, not the headline summarizing it — says something specific. Specific enough that you can run the math on it. And once you run the math, the trade of "claim early to beat the cut" turns out to be one of the worst financial decisions a pre-retiree can make. Not a controversial decision. A bad one. Mathematically. Let me show you.

What the 2025 Trustees Report actually says

The Old-Age and Survivors Insurance Trust Fund — call it the OASI fund, the one that pays retirement benefits — is currently projected to run short of money in 2033. After that point, ongoing payroll-tax revenue covers approximately 77% of scheduled benefits. The Trustees report is updated every year; the 2025 version was released last June.

So when someone says "Social Security is going broke," what they almost always mean is "the trust fund will be depleted." What they almost always do not mean is "Social Security stops paying." Those are two very different statements. The trust fund is a buffer. When the buffer runs out, the system continues — it just continues paying out only what payroll taxes are bringing in. And payroll taxes are projected to keep covering 77% of scheduled benefits, not zero.

Now — that 23% post-depletion cut is a real risk. I am not telling you it isn't. I am telling you that claiming early to avoid it doesn't actually work as a hedge. Here's why.

The math of claiming early to "beat the cut"

Let's run the numbers on the gentleman in the back of my workshop. Sixty-three years old. His full retirement age is sixty-seven. If he claims at sixty-three, his benefit is permanently reduced by roughly 26.7% from what he'd get at full retirement age. (Each month early reduces it slightly; at four years early, you're looking at about 26-27%.) If he claims at sixty-two — the earliest possible — that reduction is 30%.

So he's offering to permanently take a roughly 30% cut on his benefit, every month for the rest of his life, in order to avoid a hypothetical 23% cut that would only apply to the portion of his benefits paid after 2033 — and only if Congress takes no action.

Let me say that one more time, more slowly. Trade a guaranteed 30% cut now, on every dollar you collect for the rest of your life, for a possible 23% cut later, only on the post-2033 portion. That's the trade. It's not a close call.

And here's the kicker. If the 2033 cut never happens — because Congress acts before then, the way they did in 1977 and 1983 — then he ate a 30% reduction for nothing. Permanently. And his surviving spouse, if there is one, will inherit the smaller benefit because the survivor benefit is anchored to whatever the higher earner was collecting. Brutal.

What history says about depletion-prevention

This isn't the first time Social Security has been projected toward depletion. It happened in 1977. Congress passed amendments raising payroll-tax rates and the wage base. Crisis averted. It happened in 1983. The Greenspan Commission recommended raising the full retirement age from 65 to 67 (which, interestingly, is the change you and I are still living through), increasing the payroll tax, and beginning to tax Social Security benefits. Crisis averted. Both times, Congress moved before the system actually missed a check. Not perfectly, not gracefully, not on time — but they moved.

I am not telling you to bet on Congress. I am also not telling you that 2033 is a sure thing. The 2025 Trustees Report has a baseline projection, but it's a projection. The trust fund situation in any given year depends on how the economy performs, how immigration affects the workforce, how productivity moves, and what legislative action — if any — happens before 2033. The 23% number is a "if-nothing-changes" scenario, not a calendar-locked outcome.

What I am telling you is that the historical pattern of Social Security shortfalls is "Congress acts late, but acts." The historical pattern of claiming early to beat the cut is "you eat a 30% reduction permanently, even if the cut never happens." One of those is a useful planning move. The other is a panic move. Right?

The other thing the math ignores: COLAs and survivor benefits

Two more variables that the "claim early" calculation usually leaves out:

Cost-of-living adjustments compound on the bigger number. The 2026 COLA was 2.8%. Apply 2-3% COLAs over thirty years to a $5,181-a-month benefit (the maximum at age 70) versus a $2,969 benefit (the maximum at age 62), and the dollar gap doesn't just stay $2,212 — it widens. Because COLAs are percentages, the larger benefit grows by a larger absolute number every year. Over a thirty-year retirement, the cumulative effect is significant.

The survivor benefit is locked to the higher earner's claim age. When one spouse dies, the surviving spouse keeps the higher of the two benefits — not both. If the higher earner claimed at sixty-two and locked in a 30% reduction, the surviving spouse is stuck with that reduced number for the rest of their life. If the higher earner waited until seventy, the surviving spouse gets the larger benefit for as long as they live. For a married couple where one spouse is likely to outlive the other by five-plus years (the actuarial norm — women typically outlive men), this matters a lot more than most "claim early" math acknowledges.

So when you put COLAs and survivor protection on the same page as the early-claim cut, the case for waiting gets stronger, not weaker. Even before you get to the trust-fund question.

When does claiming early actually make sense?

Let me be balanced here. There are situations where claiming early is the right move, and I don't want anyone reading this to think I'm anti-early-claim across the board:

• Poor health. If you have a meaningfully reduced life expectancy and no surviving spouse to worry about, claiming early may be exactly right.
• You need the income. If you've stopped working and you don't have other resources to bridge to a later claim age, claiming early may be the least-bad option.
• You're single, no spousal coordination, and you've run the break-even math against your own life expectancy. If your honest assessment of your longevity is below 78 or so, the early-claim math can work.
• You have a unique tax situation where the income from claiming early lets you preserve other tax-advantaged assets in a meaningful way.

What is not on this list: "the system is going broke and I want mine while I can." That isn't a reason. That's a feeling — and the math doesn't support the feeling. Trading a guaranteed 30% cut for a possible 23% cut is a losing trade in every scenario except the one where you also die before the break-even age. And if you die before the break-even age, you also don't care anymore. Brutal but true, right?

What this looks like in practice

If you have been told to claim early because Social Security is going broke, here is what I'd ask back:

• Did you run the actual math on what the 2033 risk is, versus what claiming early costs you permanently?
• Have you accounted for COLAs compounding on the bigger benefit?
• Did you account for the survivor benefit being locked to the higher earner's claim age?
• Did you look at the historical record of Congress acting on prior shortfalls?
• Are you in any of the four "claim early actually makes sense" situations from the list above?

If the answer to most of these is "no — I just read a headline," that's worth a conversation. There may be legitimate reasons in your situation to claim earlier rather than later. There may not be. The point is to make the decision based on the actual numbers, not on the loudest headline of the week. That's the difference between a strategy and a feeling, and that's what gets you to the place where you can sleep at night.

The bottom line

The headlines say "Social Security is going broke." The 2025 Trustees Report says the trust fund is projected to be depleted in 2033, after which ongoing payroll taxes are expected to cover 77% of scheduled benefits — a 23% across-the-board cut on the post-2033 portion, absent congressional action. Trading a guaranteed 30% cut today, locked in for the rest of your life, to hedge against a possible 23% cut later, is a losing trade. The math doesn't support it. The history of prior shortfalls doesn't support it. And the COLAs and survivor benefit dynamics make it worse, not better.

That doesn't mean ignore the trust-fund question. It means plan for it the way you plan for any risk — with the actual numbers, the actual rules, and the trade-offs you can defend on a piece of paper. Not on a headline.