The Social Security Act was signed into law on August 14, 1935. On its 90th anniversary, how much do you know about the program? Let’s play “Two Truths and A Lie” and find out! Can you guess which of these three statements is the lie?
A. Social Security faces a significant financial shortfall, which Congress needs to address.
B. If Social Security’s retirement age had been pegged to increases in life expectancy, the retirement age today would be over age 80.
C. Social Security collects taxes from wealthier Americans to provide benefits to low-income seniors.
Let’s see how you did!
A. TRUTH! Social Security is already running a deficit: It pays out more each year in benefits than it collects in payroll taxes, so it uses money from the Social Security Trust Fund to make up the difference. The Trust Fund will run out in about 10 years, in 2033, and Social Security will only be able to pay a portion of promised benefits. Congress should take action to prevent this outcome.
B. TRUTH! When Social Security was created, life expectancy at birth was less than 62. Someone born in 2010 is expected to live for nearly 79 years. Had Social Security’s retirement age adjusted with increases in life expectancy, Social Security’s retirement age would be over 80! Of course, no one supports increasing Social Security’s retirement age by that much, but it is worth considering modestly increasing Social Security’s retirement age.
C. LIE! Social Security’s payroll tax is imposed on the first dollar every worker earns. Those payroll taxes are then used to pay current beneficiaries, most of whom are retirees. Social Security doesn’t take from the rich to give to the poor, rather it takes money from young workers to give to retirees. Note that young workers have higher rates of poverty than seniors; in fact, seniors are the wealthiest age cohort.
This doesn’t mean that senior citizens don’t deserve Social Security benefits: Their retirement benefit payments are based on each person’s lifetime of income, and therefore are related to the amount of payroll taxes they paid (although the expected benefits of this generation exceed the payments they have made to the system).
Seniors have been taxed on their Social Security benefits, beginning in 1984 following passage of a set of Amendments in 1983. The “One Big Beautiful Bill” (OBBB) signed into law by President Donald Trump on July 4, 2025, reverses some of these taxes. It allows seniors to keep thousands more from their Social Security check without filling out a single extra form. The OBBB gives seniors a $6,000 tax deduction, reducing or eliminating federal income taxes on Social Security benefits for many recipients.
Bottom Line:
As Congress considers how to address Social Security’s growing financial problems, it’s essential to understand how the program operates, as well as who it helps, and who it hurts. Brookings Institution scholar William Galston painted a dire picture: “If lawmakers acted tomorrow, restoring Social Security’s long-term solvency would require a 22% benefit cut for current and future beneficiaries, a payroll tax increase to 16%, up from the current 12%, or a combination of benefit cuts and tax hikes.” Galston continued in his Wall Street Journal column, “If we waited until the trust fund was depleted, we would have to cut benefits by nearly 26%, or the payroll tax would have to rise to nearly 17%.”
Given that today’s workers are already having trouble making ends meet, we cannot wait any longer. America’s seniors deserve Social Security that works for them.