Social Security is not going bankrupt, but it is approaching a major funding shortfall that could affect millions of Americans if Congress does not act. For most retirees, Social Security is a foundational source of monthly income. More than 70 million people rely on those checks today, and the consequences of inaction would be significant not only for beneficiaries, but for the broader U.S. economy, too.
Social Security operates primarily as a pay-as-you-go program. Payroll taxes collected from current workers, along with taxes on benefits and other income, are used to pay benefits to current recipients. In 1983, bipartisan reforms signed into law by President Ronald Reagan were designed to strengthen the program for decades. Those changes created reserves in the Social Security trust funds, which have helped make up the difference since payroll taxes alone stopped covering full program costs around 2010.
