American lawmakers have long known that Social Security is on an unsustainable path. An aging population has created a funding imbalance that now threatens the program’s solvency.
Despite this, cutting Social Security remains politically taboo. Nearly 79% of U.S. adults –- across political affiliations — oppose any reductions, according to a 2024 Pew Research survey. (1) This broad support has made the program a political “third rail”: touch it, and your career could be over.
Still, Bernard Yaros, lead U.S. economist at Oxford Economics, warns that cuts may ultimately be unavoidable — driven not by political will, but by a force beyond lawmakers’ control: the bond market.
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Rise of the bond vigilantes
According to Yaros, the U.S. government is approaching a fiscal turning point. As the Social Security trust fund is depleted, the government will need to borrow more to cover the shortfall. While this approach may be politically palatable, it is far less popular with bond investors — the ultimate lenders to the federal government.
Yaros warns that a loss of confidence from these investors could send Treasury yields sharply higher, putting significant pressure on Congress to act. In the end, lawmakers may be forced to make difficult choices, including cuts to Social Security.
“These corrective actions will be painful for many households but are necessary to head off the risk of a fiscal crisis, whereby an abrupt, large decline in Treasury demand relative to supply sparks a sharp, sustained increase in interest rates,” Yaros wrote in an August note. [2]
The term “bond vigilantes” may sound like Wall Street folklore, but it has real meaning. Economist Ed Yardeni coined the phrase decades ago to describe investors who pressure governments into fiscal discipline when politicians won’t.
The phenomenon reemerged this spring: bond yields surged following President Donald Trump’s Liberation Day tariffs, prompting a swift policy reversal. As economist Nouriel Roubini put it, “the most powerful people in the world are the bond vigilantes.”
Yet the Trump administration continues to test their patience.
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Trump’s fiscal path accelerates the crisis
As the issuer of Treasury bonds, the Trump administration effectively acts as the borrower in global credit markets. While it doesn’t control these markets, it influences them through fiscal policy decisions — particularly on spending and taxes.
Concerns over growing the growing budget deficit have already contributed to rising bond yields, according to Goldman Sachs. (3) Meanwhile, tax cuts enacted under the One Big Beautiful Bill Act (OBBBA) could reduce revenue flowing into the Social Security trust fund by an estimated $170 billion between 2025 and 2034, according to the Tax Policy Center. (4)
Together with the Social Security Fairness Act, the OBBBA has accelerated the projected insolvency date of the trust fund from 2033 to 2032, according to the Committee for a Responsible Federal Budget (CRFB). (5)
In short, potential cuts to the nation’s social safety net may arrive sooner than expected.
What can you do?
If you’re planning for retirement, it’s wise to factor in the potential risk of Social Security cuts. One way to do this is by stress-testing your retirement plan — assume benefits are reduced and see whether your other income sources can cover your living expenses.
If there’s a shortfall, consider adjusting your retirement budget or leaning more heavily on tax-advantaged accounts like the Health Savings Accounts (HSAs), 401(k)s, and IRAs to build additional security.
To be clear, Social Security cuts are not inevitable. Congress could choose to strengthen the program through measures such as raising taxes or increasing the retirement age.
Still, building an independent nest egg that can support your needs even under a worst-case scenario is a prudent step — no matter what happens to the program.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Pew Research Center (1), Fortune (2); Goldman Sachs (3); Tax Policy Center (4); Committee for a Responsible Federal Budget (CRFB) (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.