The Social Security Administration’s 2025 Trustees Report projects that the combined trust reserves in the system will be exhausted by 2035, automatically reducing benefits unless Congress acts. For the younger generations born after 1980, this date also marks their peak-earning years and the beginning of retirement planning — a collision course for a generation between promise and fiscal reality.
How Trust Fund depletion reinvents benefits
Social Security is financed on a pay-as-you-go basis, with payroll taxes of current workers funding current retirees’ benefits. The program has been running annual deficits since 2010, after massive cohorts of baby boomer retirees pushed it to tap out decades-worth of built-up reserves in the trust funds. Those reserves — which are estimated to be $2.85 trillion in 2024 — serve to cushion against the population changes but will be depleted by 2035 under current projections.
Once the reserve is depleted, the system defaults to pay-as-you-go funding. Future payroll taxes will finance only 77-80% of the promised benefits, necessitating a 20-23% across-the-board reduction in recipients’ checks. This reduction, unlike short-term deficits, would in principle become the norm: a 30-year-old Gen Z employee entering the workforce today would have irreparably lower benefits when he retires in the 2060s, even if the trust funds are replenished one day.
Read more about Social Security
- 2026 COLA Calculator – This is how much your Social Security checks will increase based on how much you collect with the inflation adjustment next year
- Bad news for COLA in 2026 in your retirement – Here’s the Social Security check hike projections that millions of Americans won’t like
- A 63-year-old widow sends a desperate message with Social Security payments despite earning $56,000 a year: “It’s become a career”
- Four common mistakes that reduce your Social Security benefits drastically (and how the 2026 COLA adjustment to checks won’t fix it)
Generational justice on the line: Young workers pay more, receive less
The 2035 crisis is a grim intergenerational swap. Millennials (born 1981-1996) and Gen Z (born 1997-2012) will:
- Pay boomers’ full benefits through 2035 through 12.4% payroll taxes
- Endure 20-23% reductions in their own future benefits beyond 2035
- Witness a crumbling worker-to-beneficiary ratio, declining from 2.7:1 in 2023 to 2.3:1 by 2040
This imbalance is driven by simple demographics. Roughly 10,000 baby boomers retire and become beneficiaries every day, while U.S. birth rates are below replacement levels. Gen Z would have to work until they are 73 to have the same lifetime benefits boomer generations are collecting at 67 — a highly unlikely outcome.
Why Washington has not fixed the problem
Congress has been aware of Social Security’s structural deficit since the 1980s but has failed to provide a solution. Proposed solutions fall into three controversial categories:
- Benefit reductions (e.g. raising full retirement age to 69, means-testing)
- Tax increases (e.g. raising the $168,600 payroll tax cap, raising payroll tax rates to 15.6%)
- Structural reforms (e.g. introducing private accounts, expanding immigration)
Each option carries political risks. Baby boomers represent 28% of voting power and staunchly resist cutting benefits, whereas other age brackets do not have such voting muscle. According to the 2024 Trustees Report, delaying to 2035 would double the current required payroll tax increase, essentially passing the burden to Gen Z.
Generational birth year table
| Generation | Birth Years |
| Baby Boomers | 1946 – 1964 |
| Generation X | 1965 – 1980 |
| Millennials | 1981 – 1996 |
| Generation Z | 1997 – 2012 |
Survival tactics to get beyond 2035
Although legislative action is questionable, financial experts advise younger staff to:
- Maximize retirement savings: Contribute 15-20% of earnings to 401(k)s/IRAs, three times the current national average
- Delay receiving Social Security benefits: Postponing benefits from 67 to 70 boosts monthly checks by 24% — a crucial hedge against future cuts
- Diversify income streams: Invest in rental property, secondary businesses, or annuities to fill the gap left by diminished government payments
As Jonathan Ford Jr., a millennial financial adviser, puts it: “Suppose Social Security only offers 40% of pre-retirement income half of what it currently pays on average and figure your savings on that worst-case scenario.”
2035 is not just a date—it’s a demographic reckoning
The 2035 date is not a budgetary cliff — it’s an intergenerational population time bomb that requires solidarity. The Millennials and Gen Zers need to hold elected officials accountable to pass incremental fixes today, in the form of small tax hikes in addition to adjustments to the top-income earners’ income benefits. Without structural change, Social Security is a legacy program where younger Americans fund but never get to fully benefit from, destroying its original purpose as a generationally orientated safety net.
Read more: How do I obtain a Benefit Verification Letter?
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