Washington, June 17, 2026, 15:02 EDT
- Social Security’s retirement trust fund could run out of money by late 2032, meaning retirees and survivors would only get 78% of their promised benefits unless something changes.
- Penn Wharton Budget Model now pegs the depletion date at February 2033, just a few months behind the government’s projection. That’s another sign the gap isn’t far off.
- Congress still faces tough options: tax hikes, benefit cuts, more borrowing, or automatic reductions that might affect tens of millions of households.
Social Security’s funding issue is no longer just a long-term budget topic—it’s facing a political deadline. The main retirement trust fund is now seen running low by late 2032, according to projections. An independent Wharton model matches that estimate.
This is an issue now as those winning the next elections might still be serving when automatic benefit cuts hit. Social Security trustees said the Old-Age and Survivors Insurance fund is projected to run out of reserves in the fourth quarter of 2032. Once that happens, the program’s income would cover 78% of planned benefits.
The program stays. Payroll taxes keep coming in. But unless Congress acts, benefit checks get smaller. Changing the law is the tough piece.
Karen Glenn, chief actuary for the Social Security Administration, told CBS News the issue is “a simple math problem” but “not a simple political problem.” Glenn said lawmakers need to either boost revenue, cut benefits, or find some way to do a bit of both. CBS News
Penn Wharton Budget Model said the retirement fund could run out by February 2033, and the combined retirement, survivor and disability funds by February 2035. That’s a few months later than the official trustees, who forecast the combined funds would run short in Q3 2034.
Social Security faces the same big issue in both forecasts. As the population grows older, the program is sending out more payments. Fewer future workers, due to lower fertility and less immigration, will be supporting each beneficiary. The trustees also flagged that the 2025 One Big Beautiful Bill Act cut their projections for income tax revenue on Social Security benefits.
The shortfall is big. Small tweaks won’t fix it. Penn Wharton said getting Social Security solvent for 75 years would take raising the payroll tax rate from 12.4% to 17.1%, cutting benefits by an equal share, or a mix of both.
Washington has been here before. Lawmakers have a list of fixes for Social Security: lift or remove the cap on payroll-taxable wages, hike the payroll tax rate, push up the retirement age, trim benefits for high earners or tax investment gains. CBS reported that in 2026, wages over $184,500 won’t face the Social Security payroll tax.
Both options come with a cost. Jason Fichtner, senior fellow at the Bipartisan Policy Center and a former official at the Social Security Administration, said raising the payroll tax a lot could mean a “huge burden on payrolls,” and might hurt hiring and productivity. CBS News
Benefit cuts would be a hit on their own. The Committee for a Responsible Federal Budget said this month that a broad cut tied to insolvency might run to around $500 a month for current retirees on average, and that some states would see even bigger average cuts. Later, the group pointed out that the latest trustees’ estimate suggests roughly a 22% cut, not the 24% it used before in its state breakdown.
Timing is also an issue. Gopi Shah Goda, who leads the Retirement Security Project at Brookings, told AARP that Congress could have taken smaller steps 20 years ago, but now lawmakers will have to find money or cut benefits much sooner.
Medicare’s timeline is tight. Trustees project the Hospital Insurance fund, which covers Part A hospital care, will run out of reserves in Q2 2033. At that point, only 89% of scheduled benefits could be paid.
Forecasts remain subject to change. Faster wage growth could improve the outlook. Fewer births, slower immigration, or longer lives would have the opposite effect. Penn Wharton warned its lower fertility assumption means a smaller group of future taxpayers and higher expenses later this century.
Washington is facing a set date and some tough choices, but hasn’t agreed on any plan yet. Richard Johnson, senior vice president of financial security at AARP, told the Washington Post the trustees’ report isn’t a “panic button” but called it “a warning light.” washingtonpost.com
