Business

The Social Security tsunami: Payments could be cut by 23%, doubling the poverty rate for America’s seniors

Published

4 months ago

August 8, 2025

As millions of Americans rely on Social Security for their monthly income, new reports indicate the program’s finances are at a critical juncture. Here’s what every current or soon-to-be recipient should understand about the future of Social Security, the risks to your benefits, and what steps Congress could take to keep the program strong.

When will Social Security “run out of money”?

The latest 2025 Social Security Trustees Report finds the program’s main reserve fund—the Old-Age and Survivors Insurance (OASI) Trust Fund—will be depleted in 2033. That’s just eight years from now.

At that point, unless Congress acts, the system will only have enough payroll tax revenue coming in to pay about 77% of scheduled benefits—triggering an automatic across-the-board cut of around 23% for all recipients.

What does this mean for you?
- If you’re already receiving or about to receive Social Security, a typical monthly benefit check of $2,000 could drop to about $1,540 if Congress does not address the funding shortfall.
- For a dual-earning couple, that could mean losing as much as $18,000 per year in benefits—potentially doubling the poverty rate among America’s seniors.

Why is this happening?

For decades, Social Security collected more in taxes than it paid out, building up a trust fund that earned interest. But the math flipped in 2021: America’s aging population means there are fewer workers paying into the system for each retiree drawing benefits. Recent tax changes and new laws have accelerated the shortfall, moving up the date of potential cuts.

What needs to happen to prevent cuts?

Congress needs to act within the next few years to prevent automatic benefit reductions. Lawmakers have several options—most likely, a combination of them will be required:

Raise the payroll tax cap: In 2025, earnings over $176,100 are not taxed for Social Security. Proposals would have higher earners pay more by lifting or removing this cap.
Increase the payroll tax rate: Even a gradual increase above the current 12.4% could address a significant chunk of the gap.
Raise the full retirement age: The age for full benefits is already moving to 67 for those born in 1960 or later and will likely go higher for younger generations.
Adjust the benefit formula: Lawmakers might change how initial benefits are calculated, perhaps favoring lower-income retirees with higher replacement rates while curbing benefits for high earners.
Invest in the markets: A bipartisan Senate proposal seeks to fund a new sovereign wealth fund—essentially investing part of Social Security’s reserves in stocks and bonds to seek higher returns, but this involves risk and is not a guaranteed fix.
Direct federal funding: Some plans call for one-time or ongoing federal cash injections, though this would add to the national debt.

What should recipients do now?

Stay informed: Congress has a long history of fixing Social Security before benefit cuts occur—but there are no guarantees this time.
Watch for updates: Changes to COLA (Cost-of-Living Adjustment), retirement age, and tax rates are possible, but none will affect checks overnight.
Consider advocacy: Many organizations representing older Americans are urging Congress to act now to preserve benefits for current and future retirees.

The Bottom Line: Social Security will not “run out of money” entirely; it will always have payroll taxes coming in. However, if Congress does not shore up the trust fund by 2033, automatic benefit cuts of approximately 23% will occur under current law. Most experts and lawmakers believe a fix is likely, but recipients should watch closely.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.

Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world. Explore this year’s list.

Source link

Business

Magnificent 7 isn’t that magnificent: 5 stocks have underperformed the market this year

Published

9 minutes ago

December 15, 2025

Jace Porter

S&P 500 futures were up 0.44% this morning after the index lost 1.07% on Friday, a day after setting a new all-time high on Dec.11.

The index is still up 16% year-to-date—an above-average performance for U.S. stocks. Analysts have long complained that the index is dominated by the “Magnificent 7” tech stocks. Between October 2022 and November 2025 roughly 75% of gains in the S&P 500 came from this handful of companies.

But as we draw near to the close of the year, only two of those stocks—Alphabet and Nvidia—have beaten the market as a whole, year to date:

What appears to be happening is that investors are picking between winners and losers in tech, as opposed to just herding into the index or tech stocks as a whole. That’s probably healthy if you are worried that AI spending is creating a bubble in tech stocks.

The best example of this is Oracle, which is up a respectable 14% year to date but has declined 42% from its high in September. Investors have not liked the extra debt that Oracle has taken on, at increasingly wider interest spreads above the risk-free benchmarks, to fund its AI buildout.

Wall Street is not yet ready to declare the AI gold rush a bubble. “If this is a bubble, it is still in its early stages,” Deutsche Bank analysts Adrian Cox and Stefan Abrudan said in a recent deep-dive research note on AI.

Thus far, the capital expenditure and the revenue is real: it’s hitting the top and bottom lines of Alphabet and Nvidia, and that’s why valuations for those companies are so healthy. “The charge is led by well-established Big Tech companies with multiple revenue streams, who are paying for their investment in data centers mostly out of free cash flow and from which they are generating immediate returns from enterprise customers,” Cox and Abrudan wrote.

“We think that reports of a bubble are exaggerated (for now),” they said.

Elsewhere: Asian markets were down today but markets in Europe largely rose in early trading. The STOXX Europe 600 was up 0.63% at the time of writing; The U.K.’s FTSE 100 was up 0.74%.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were up 0.44% this morning. The last session closed down 1.07%.
STOXX Europe 600 was up 0.63% in early trading.
The U.K.’s FTSE 100 was up 0.74% in early trading.
Japan’s Nikkei 225 was down 1.31%.
China’s CSI 300 was down 0.63%.
The South Korea KOSPI was down 1.84%.
India’s NIFTY 50 was down 0.12%.
Bitcoin was at $89K.

Join us at the Fortune Workplace Innovation Summit May 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.

Source link

Business

Visa launches stablecoins advisory practice to keep up with crypto wave

Published

40 minutes ago

December 15, 2025

Jace Porter

Another major financial institution is doubling down on stablecoins and on crypto. This time, it’s Visa. The company announced on Monday the launch of its Stablecoins Advisory Practice, a service which aims to aid fintechs, banks, and other businesses with their strategy and implementation of stablecoins.

“Helping our clients grow is frankly the reason we exist in stablecoin,” said Carl Rutstein, global head of Visa Consulting and Analytics, in an interview with Fortune. “What Visa is doing in this space is just one more area where our clients have a need.”

Stablecoins are a type of cryptocurrency designed to maintain a constant value by means of reserves that peg them to a fiat currency, typically the U.S. dollar. They have recently been embraced by a wide range of companies from the traditional financial sector following President Donald Trump’s signing of the Genius Act in July, legislation which creates rules for issuing the digital asset. In the months since, other payments powerhouses like Paypal and Mastercard have boosted their stablecoin capabilities.

Rutstein said that Visa’s stablecoins advisory has dozens of clients, among whom are Navy Federal Credit Union, the credit union VyStar, and a financial institution called Pathward. He said the practice will help businesses with their strategy, tech and operations, and implementation of stablecoins. Its clients use cases for stablecoins include cross-border transactions, especially to countries with volatile currencies, and business-to-business transactions. After using Visa’s advisory, Rutstein said some businesses may push forward with stablecoins, while others may conclude there is not a customer need. The company said that it expects the practice will grow to hundreds of clients.

Visa is by no means new to crypto. In 2023, the company piloted stablecoin settlement using USDC, and it now has over 130 stablecoin-linked card issuing programs in more than 40 countries. Visa also has about $3.5 billion in annualized stablecoin settlement volume.

“Stablecoins may represent an opportunity to enhance speed and lower cost in payments,” said Matt Freeman, senior vice president of Navy Federal Credit Union, in the statement. “So with the support of Visa, we are evaluating how this technology could fit into our broader strategy to deliver meaningful value to our 15 million members worldwide.”

Source link

Business

Not all CEOs favor Trump’s executive order to block state AI laws

Published

1 hour ago

December 15, 2025

Jace Porter

Good morning. What do companies in health care, insurance, utilities, construction, professional services, financial services, education, transportation, waste management, and alcohol/cannabis distribution, among others, have in common? They’re regulated at the state level. In certain areas (food safety, environmental standards and data privacy), a mix of state and federal mandates apply. Washington sets the baseline, and individual states layer on laws that aim to reflect the priorities of local voters. In the absence of a federal missive, like Roe v. Wade in legalizing abortion, state regulations apply.

So one might assume that CEOs would welcome Donald Trump’s executive order on AI last week that blocks state laws setting AI standards in favor of “a minimally burdensome national standard.” Silicon Valley types like OpenAI CEO Sam Altman, venture capitalist Marc Andreessen and, of course, AI czar David Sacks, praise the move as necessary for America to compete against the bête noire of China. But seven leaders I spoke with had more mixed views. (I spoke to them without attribution to encourage honest feedback.)

Nobody wants a growing patchwork of state laws that cause confusion, rising compliance costs, or what one person called “a race to be the Delaware of AI.” But neither do they want a vacuum when it comes to mitigating the risks or a situation where laws are set by the White House instead of Congress. Among the concerns:

The Executive Order is probably not legal. Everyone agreed that Trump can’t dismiss state rights with the stroke of a pen. As law firm Fisher Phillips notes, “all current and pending state and local AI laws will remain enforceable unless and until a court blocks them through an injunction, or Congress passes a federal law that preempts them.” The consensus: Congress should act—and fear-mongering doesn’t help. “I’m in a state with a lot of regulation and a lot of innovation,” said one California-based CEO. “What matters is resources, talent and technology.”

Businesses want clarity and protection. Tennessee’s ELVIS Act protects individuals from the unauthorized use of AI to mimic their voice and likeness; Texas prohibits its use for unlawful discrimination or sexually explicit content. Colorado requires companies to inform consumers when AI is used for high-stakes decisions from hiring to lending. Smaller businesses want the behemoths of tech kept in check. “Rules can level the playing field,” said one source, “and it’s more expensive to set standards in court.”

The U.S. needs to maintain its competitive edge. The EU Artificial Intelligence Act gives people the right to opt out of having their data used to train models, which stifles innovation. China has an AI Plus framework and President Xi Jinping has proposed creating a World Artificial Intelligence Cooperation Organization (WAICO) to promote a global governance system. The U.S. needs to, as one person put it, have a seat at the table with laws that protect copyright, patents, market access and consumer protections while driving regulation. “I’d rather have less regulation than more regulation,” an enterprise tech leader told me on Friday, “but I’d rather have some regulation than no regulation.”

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Weekend mass shootings

Australia Prime Minister Anthony Albanese has vowed action to tighten gun laws after a father and son, using legally licensed firearms, killed 15 people at a Hanukkah celebration at Bondi Beach. Meanwhile, Brown University has called off final exams and sent students home early after a gunman killed two and injured nine in an on-campus shooting.

David Zaslav’s potential payday

Warner Bros. Discovery CEO David Zaslav is poised to collect as much as $1 billion from the sale of WBD if the bidding war between Netflix and Paramount continues to drive up the company’s stock price. His enormous payout will contrast starkly with the job cuts that are expected regardless of which deal goes through and the cost-cutting he’s already imposed at WBD.

Volkswagen’s Germany closure

Volkswagen will cease production at a Dresden, Germany, plant on Tuesday, the first time it’s shuttered a production facility in Germany in 88 years. Europe’s largest automaker is contending with weak demand in China and Europe and the sting of U.S. tariffs.

Private equity squeezes fire departments

Companies backed by private equity firms are quietly buying up the public safety systems needed to fight fires and increasing costs for budget-constrained U.S. fire departments, 85% of which are crewed by volunteers.

Google’s SpaceX gain

Google parent Alphabet is poised to record another gain as the value of SpaceX nears $800 billion. Elon Musk’s rocket company completed a tender offer that priced shares at $421. Alphabet joined Fidelity Investments in a $1 billion funding round in 2015 in exchange for what was then a 10% stake in SpaceX.

Christmas kitsch boom

Connecticut is cashing in on its role in sappy Christmas movies. Locations in the state are the settings for at least 22 Christmas movies by Hallmark, Lifetime and others, and it’s now promoting tours of the quaint towns and cities where the predictable—but hugely popular—movies are filmed.

The markets

S&P 500 futures are up 0.44% this morning. The last session closed down 1.07%. STOXX Europe 600 was up 0.75% in early trading. The U.K.’s FTSE 100 was up 0.88% in early trading. Japan’s Nikkei 225 was down 1.31%. China’s CSI 300 was down 0.63%. The South Korea KOSPI was down 1.84%. India’s NIFTY 50 was down 0.07%. Bitcoin went to $90K.