Social Security faces deeper troubles than trustees admit | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Most everyone is aware of the bad news on Social Security that is revealed each year in the Social Security Trustees’ report.

Every year, the Trustees release details on the program’s finances. Unfortunately, for a long time, the report has shown that the program’s trust fund is at risk of running dry.

In fact, the 2025 report shows that the trust fund will run short in 2033, resulting in an automatic 23% cut to benefits because Social Security won’t have enough money to keep paying out the full benefit that was promised.

💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵

The Social Security Disability trust fund is more stable, and if the two trust funds are combined, the benefit cut could be averted until 2034. The combination of the trust funds would also mean the benefits cut is just 19% instead of 23%. However, combining the trust funds would require a change to the law.

Hearing that a Social Security benefits cut is just eight or nine years away is not good for retirees who depend on these benefits to make ends meet.

Unfortunately, the Center for Retirement Research (CRR) actually suggests that things may be worse than the Trustees are letting on.

Retirees have a lot to worry about when it comes to Social Security.

Image source&colon; Shutterstock

Social Security is in even more serious financial trouble, experts say

According to the Center for Retirement Research, the Trustees may actually be underestimating Social Security’s financial trouble as a result of their too-rosy projections.

Specifically, there are three areas where CRR thinks the Trustees have been overly optimistic – all of which could point to the fact that the benefits program may be in much deeper trouble than we realize. Those three areas are:

The fertility rate
Potential deportation of millions of immigrants and reduced immigration in later years due to a change in immigration policy
The potential for people to live longer than anticipated based on changes in life expectancy over time

None of these factors is currently working in Social Security’s favor, and as CRR points out, things are already not looking good for retirees who face a substantial shortfall in the benefits they most need to help cover their bills, and for which they worked all their lives by paying into the system.

Declining fertility rates could mean big trouble for Social Security

With President Trump’s anti-immigration stance, it seems clear that there is a very real risk of fewer immigrants providing support to Social Security.

However, the CRR focused its attention for now on assumptions about the fertility rate, and it is clear based on their data that the Trustees are definitely being a little too optimistic in these projections.

As CRR pointed out, the fertility rate has been falling since the 1960s, and the Great Recession accelerated that trend. Despite the hopes of policymakers that fertility rates would rebound once economic conditions got more stable, that didn’t actually happen.

Now, the hypothetical number of births for a woman at the end of her childbearing years is just 1.63 in the United States, which is in line with many other developed countries.

Despite this fact, the Social Security Trustees project 1.9 children per woman based on surveys of women of childbearing age and their belief that women are just postponing the age when they have kids.

However, the Trustee’s report is the outlier, and the Congressional Budget Office and the Census Bureau are all projecting lower fertility rates – as low as 1.5 children per woman. If this pans out, the Social Security deficit would be much greater.

“If low fertility persists, the Trustees will eventually have to reduce their assumptions,” The Center for Retirement Research said. “Lower assumed fertility could produce 75-year deficits in the range of 4 to 4.5 percent.”

Because of both these flawed assumptions and the basic fact that the program is slated to run out of money in less than a decade, the Center for Retirement Research is very clear on what needs to happen: “Congress just needs to act.”