Social Security Fund Faces Earlier Depletion Than Expected

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The doomsday clock for Social Security benefits is ticking down faster than previously thought.

The trust fund that helps pay out Social Security retirement benefits is projected to run out of money in the fourth quarter of 2032, a quarter earlier than estimated last year, the Social Security Administration's board of trustees said in its annual report Tuesday.1 After that, beneficiaries will be paid only from incoming payroll taxes and will get 78% of their scheduled benefits, declining to 62% by 2100, the board said. The fund that supports disability benefits is similarly in the red and on track to run out in 2034.

The report underscored the dwindling time lawmakers have to fix the finances of the government's largest program, which pays benefits to 70 million people, including retirees, their beneficiaries, and people with disabilities. Social Security kept 23.5 million people out of poverty in 2024, according to an analysis by the Center on Budget and Policy Priorities, a progressive think tank.2

The impending expiration of the Social Security trust fund could disrupt the economy in six years if lawmakers fail to address the program's financial deficits.

"Lawmakers have many options for changes that would reduce or eliminate the long-term financing shortfalls," the trustees wrote. "Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare."

The crisis has been slow in the making.

Social Security benefits are funded by a 12.4% payroll tax paid equally by employers and workers. For decades, those taxes exceeded the benefits that the administration pays out. But the program's finances have become increasingly untenable as birth rates have fallen and the population has grown older.

Since 2010, the math hasn't added up, and the program has run a negative cash flow, prompting the trustees to issue increasingly urgent warnings about impending benefit cuts if nothing changes.3

The crucial date was brought forward by three major factors last year, the trustees said: a further decline in birth rates; President Donald Trump's crackdown on immigration; and the One Big Beautiful Bill tax cut, which included a $6,000 break for people over 65.

Solving the problem will take either a tax increase or a cut to benefits, the trustees said. Over the years, various proposals have been floated, including raising the retirement age, but have gone nowhere.

The report reignited the debate over how to fix the problem. The AARP senior advocacy group released a statement arguing against benefit cuts.

"This should be a wake-up call: Congress needs to act," the group said in a statement.4 "Americans have worked hard and paid into Social Security their entire lives, and they deserve to count on it when they retire." Democratic lawmakers on the House Social Security committee said the hole should be plugged by taxing the wealthy, and blasted Elon Musk's DOGE cost-cutting task force for failing to improve the program's finances after making unsubstantiated claims it was rife with fraud.56

The Center for a Responsible Federal Budget, a budget watchdog think tank, proposed several reforms, including capping benefits at $100,000 for a couple, expanding employer taxes, and several other ideas.7

"Washington is sleepwalking into a retirement crisis, allowing our nation’s most important trust funds to go insolvent at the expense of over 70 million beneficiaries who count on these programs," Maya MacGuineas, president of the group, said in a statement.

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