Social Security is seven years from a fiscal cliff that would slash benefits for millions of retirees unless Congress acts, a new analysis by the Committee for a Responsible Federal Budget (CRFB) warns.

What Happened: The group estimates insolvency of the program's main trust fund by late 2032 would trigger an automatic, across‑the‑board cut of roughly 24%, equal to about $18,100 a year for a typical dual‑earning couple retiring in early 2033.

The trustees of Social Security report that the Old‑Age and Survivors Insurance fund will be depleted in 2033, at which point incoming payroll taxes would cover only part of the promised benefits. Combined Social Security funds would be exhausted in 2034, with roughly 81% of scheduled benefits payable under current law.

The clock is ticking for Medicare, too. The Medicare Hospital Insurance trust fund is projected to be depleted in 2033, meaning taxes would cover about 89% of scheduled hospital benefits until lawmakers restore solvency. CRFB adds that an insolvency event could immediately reduce reimbursements, heightening access pressures for seniors.

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CRFB attributes the larger near‑term cut to recent tax changes that reduce revenue from the income taxation of Social Security benefits, including a new "senior" deduction, which together nudge the required benefit reduction up by about one percentage point at insolvency.

Why It Matters: The warning echoes concerns voiced two decades ago by Warren Buffett. At Berkshire Hathaway's 2005 shareholder meeting, Buffett said, "I don't want to do anything to hurt the bottom 10–20% of the population," and he floated options such as lifting the wage cap and gradually raising the retirement age.

Absent a deal, federal law requires benefits to match incoming revenue once reserves run dry, which would turn a long‑debated financing problem into an immediate pay cut for more than 60 million beneficiaries. Sooner is better for reform, the trustees say, because earlier action allows gradual phase‑ins and gives Americans time to plan.

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