Social Security reserves drop to 78 percent
The 2026 Trustees Report projects that without congressional action, payroll taxes will only cover three-quarters of scheduled retirement and survivor benefits after 2032.
By Thabo Hoffmann ·
The Old-Age and Survivors Insurance Trust Fund is projected to run out of cash reserves in 2032, according to the 2026 annual Social Security and Medicare Trustees Reports. If Congress does not intervene before that date, incoming revenue will pay for only 78 percent of scheduled retirement and survivor benefits. The report dates this depletion to the fourth quarter of 2032. This estimate is one quarter earlier than the projection made in the previous year's report. The Congressional Budget Office independently projects the fund will be exhausted during fiscal year 2032.
The Disability Insurance Trust Fund holds a much larger reserve. It contains enough funds to pay 100 percent of scheduled disability benefits through 2100. That is the end of the report's projection window. Combined, the retirement and disability funds can pay full benefits through the third quarter of 2034. After that period, ongoing revenue would cover about 83 percent of scheduled benefits. Current law prevents the two funds from being merged without a statutory change.
Trustees cite three main factors for the worsening financial outlook. These include lower birth rates, reduced immigration, and changes in federal tax law. The report notes that provisions of the One Big Beautiful Bill Act are expected to lower the revenue Social Security receives from taxes on benefits. The fund does not run out of money entirely in 2032. The program will continue collecting payroll taxes. However, the cash on hand will not be sufficient to cover the full amount of scheduled benefits.
The gap between benefit payments and revenues is set to widen over the next 75 years under current law, according to the CBO. Social Security officials have analyzed several potential solutions to close this funding shortfall. These options include adjusting payroll taxes, changing the retirement age, altering benefit calculations, and modifying cost-of-living adjustments. The Trustees did not recommend a specific path forward. They stated that acting earlier would give lawmakers more time to phase in changes and greater flexibility in choosing a course of action.
