A gloomy financial prognosis for Social Security by the program’s trustees could spell a reduction in benefits for millions of Americans in just six years. The cuts to Social Security benefits would come amid changes that already make it more difficult for low-income adults to access key federal nutrition and health programs.
A June report estimated that, barring congressional action, the Social Security Old Age and Survivors Insurance trust fund, or OASI—which includes both retiree and survivor benefits—is expected to be depleted by the end of 2032. Incoming revenue for the program will only be able to pay out 78 percent of full benefits, a cut of 22 percent applicable to current and future beneficiaries.
Around 70 million Americans receive Social Security benefits, the majority of which is paid through the OASI trust fund. If combined with a separate, far smaller trust fund that pays out benefits for disabled workers and their families, the OASI fund could remain solvent for an additional two years—but this would also require action from Congress. The earlier timeline is due in part to the Republican tax and spending law that was approved by Congress and signed by President Donald Trump last year, which reduced revenue going into the Social Security trust fund. Lower expected rates of immigration and births will also contribute to the fund’s depletion.
Social Security is not an anti-poverty program, and the pending bankruptcy of its primary trust fund would affect millions across wealth brackets. But low-income beneficiaries will likely be the hardest hit.
“There are a significant number of Americans who only have Social Security, and so any type of reduction in benefits would have a much more dramatic effect on those who have no other source of income,” said Joel Eskovitz, senior director of Social Security and savings at the AARP Public Policy Institute.
The Republican law foisted onto states a share of benefit costs for the Supplemental Nutrition Assistance Program, or SNAP, and Medicaid. It also tightened work requirements and narrowed eligibility for both programs. For SNAP, this includes the expansion of work requirements for able-bodied adults without children, applying to adults up to age 65, where previously people over age 54 were exempt. The new work requirement also removes exemptions for homeless people and veterans.
According to the Center on Budget and Policy Priorities, approximately 1.4 million adults between the ages of 55 and 64 receive SNAP benefits. Another report by the Urban Institute found that the Republican law would result in 480,000 families with a member between the ages of 55 and 64 losing their SNAP benefits entirely, while 312,000 would see lower benefits.
The new work requirements for Medicaid are applicable to adults living in states that expanded the program under the Affordable Care Act. There is not total overlap between the exemptions for SNAP and Medicaid work requirements, further complicating the process of applying for and maintaining both benefits.
For the first time, millions of enrollees between the ages of 55 and 64 will need to prove either that they are working or that they qualify for an exemption, a significant burden that could result in people losing their benefits. According to the AARP, nearly 80 percent of the 4.6 million adults between the ages of 55 and 64 who receive both SNAP and Medicaid benefits reported being either retired or unemployed. For those roughly 20 percent that do work, more than half did not meet the minimum 80-hour-per-month requirement.
Tracey Gronniger, the managing director for economic policy for the advocacy group Justice in Aging, said that the work requirements do not accurately “reflect the disabilities and the challenges that older adults may be facing in terms of age discrimination, or being able to maintain work, or other kinds of health issues.” Meanwhile, given the higher burden of expenses on states, legislatures may choose to cut SNAP benefits or narrow eligibility for the program, as well as slash Medicaid payments to health care providers, both of which would result in people being booted from the program.
Even when they are no longer subject to work requirements, these older adults who have struggled to maintain their benefits may be faced with further economic hardship. Imagine a childless 59-year-old SNAP and Medicaid recipient who must now work 80 hours per month to obtain their benefits. Assuming that this person is able to find a job and maintain employment for the next six years, they decide to retire at age 65 in 2032. That person may no longer be subject to work requirements, but if Congress has not taken action to raise revenue for the Social Security fund, the individual is now receiving payments that have been cut by 22 percent.
For those older Americans who rely entirely on Social Security payments as their only source of income, these cuts would feel like salt in a wound already gouged by stringent program requirements for their other benefits.
“We’re going to see older adults who should be economically secure, who should have these benefits that are helping them to maintain their economic security, instead finding that it’s harder and harder to keep up with costs of health care and shelter and all the other expenses that people continue to have,” said Gronniger.
Once a person reaches age 65, their difficulties in obtaining benefits will not necessarily come to an end. Jessica Johnston, senior strategist for economic wellbeing at the National Council on Aging, noted that SNAP already has low participation rates among eligible adults. In 2023, only 38 percent of eligible adults over age 65 received SNAP benefits. This low number is due in part to significant administrative hurdles and personal reluctance to accept assistance from the government. SNAP participants already need to regularly recertify their benefits, and requiring states to screen for the new requirements and exceptions could further complicate that process.
“We already have an enrollment problem, and so when you add on the number of older adults who might fall off the rolls due to not meeting a work requirement or not understanding new recertification requirements, the likelihood that they will unexpectedly lose the benefit becomes much higher as well,” said Johnston.
There is also a complicated intersection of eligibility for nutrition and health care assistance. In 2022, nearly nine million adults ages 65 and over who were eligible for SNAP were not eligible for the Medicare Savings Program, which covers premiums for qualifying low-income elderly individuals. (Separately, the hospital trust fund for Medicare is expected to be depleted by 2033, with money enough to pay 89 percent of full benefits.)
Johnston said that the assistance offered by SNAP to cover food purchases would not offset rising health care costs—and that these struggles could in turn be compounded by cuts to Social Security.
“A cut to their Social Security benefit is likely going to mean that they have to make even more difficult decisions about whether to pay for housing or for food or for medications,” said Johnston. “We hear from our community-based partners regularly that older adults will come in and talk about cutting pills in half or not being able to afford food that helps them manage chronic conditions, and so a cut to Social Security is only going to exacerbate those types of situations.”
States are already responding to the new limits on SNAP and Medicaid, but there is some time to address the pending bankruptcy of the Social Security fund. There are a few strategies that Congress could employ to keep Social Security solvent, such as eliminating the limit on taxable income. The trust fund largely receives revenue through payroll taxes, but there is a taxable maximum of $184,500. This means that most people earning less than that amount will pay taxes on 100 percent of their income, whereas a person with a far higher salary will only pay taxes up to that $184,500 limit. Rising income inequality has exacerbated the issue, with the fund unable to benefit from higher earners’ pay.
Lifting the cap on the payroll tax has bipartisan support and polls well among Americans, although making any change to Social Security is easier said than done. Other strategies, such as raising the tax rate, increasing the retirement age, or slimming down benefits, would likely be less popular with Americans. But Eskovitz said that lawmakers could not afford to kick the can down the road.
“The quicker Congress acts, the less dramatic the changes will need to be,” Eskovitz said.
