The recent Social Security trustees report projected that the combined Trust Funds for Social Security retirement and disability benefits (officially called the Old-Age and Survivors Disability Insurance benefits, or OASDI) would be exhausted in 2034. These projections use the Social Security actuaries’ best estimate for various assumptions to project the system’s operations over the next 75 years.

Even though 2034 is just 14 short years away, there’s no need to panic about losing all your benefits. Remember that even if the trust funds are depleted, your Social Security benefits wouldn’t go away completely because the trust funds are only a supplemental source of funding for Social Security. FICA taxes paid by workers, along with a few other sources of funding, would still support about 76% of Social Security’s benefits, even if the trust fund were fully depleted.

The trustees’ report also estimates the magnitude of changes that would be needed to make Social Security sustainable for decades to come. The report shows that Social Security’s estimated long-term funding deficit equals 3.54% of workers’ pay that’s covered by the system. To balance the system’s finances and prevent across-the-board benefit reductions in 2034, our politicians would need to agree to a package of tax increases and benefit reductions; this package would need to have an aggregate value of about 3-1/2 cents for every dollar of worker’s pay.

Here’s another way to look at the deficit of the Social Security OASDI program: Social Security’s deficit is currently about 1.2% of Gross Domestic Product (GDP). This means that for every $100 that our economy generates in 2020, about $1.20 would be needed to close the long-term deficit in the Social Security system.

The full trustees report estimates that if Congress decides to close the actuarial deficit only by implementing tax increases, they’d need to apply an immediate tax increase equal to 3.36% of pay. Under current law, tax increases would be shared equally by all covered workers and employers.

Another possibility would be to apply the FICA tax to pay in excess of the annual Social Security wage base. For example, in 2021, the FICA tax isn’t applied to earned compensation above $142,800. Applying the FICA tax to all compensation above this amount would reduce a large portion of the long-term deficit.

On the other hand, if Congress decides to close the actuarial deficit with benefit reductions only, they’d need to apply an immediate 21% reduction in benefits to all current and future retirees. Other possible benefit reductions include increasing the retirement age at which you can draw Social Security benefits, reducing the value of cost-of-living increases for retirees, or reducing the growth of benefits of current workers.

Here’s the political challenge: Republicans typically prefer benefit reductions to reduce the system’s deficits, whereas Democrats typically prefer tax increases. However, it’s very unrealistic to balance the system onlywith tax increases or only with benefit reductions. It would be much more realistic to adopt a combination of tax increases and benefit reductions, which would need bipartisan support.

Social Security is the most popular government program by far, and it’s essential to the financial well-being of America’s elderly. If Congress defaults on its promises to keep this program funded, the result could be widespread financial hardship for retirees and a major setback to the economy. At 3-1/2 cents per dollar of compensation, or $1.20 for every $100 dollars of GDP, the cost of the necessary fixes seems both moderate and affordable.

Delaying the necessary fixes will only make it more expensive and harder for all concerned. Our leaders need to find the will to set aside their differences and compromise on a solution that will save a program that’s so valuable for millions of citizens.