The Social Security Board of Trustees released its annual report confirming that the trust fund responsible for paying retirement benefits is projected to be exhausted by 2033, unchanged from last year’s estimate. At that point, scheduled benefits will be reduced to about 77% of their full amount.
The combined trust funds, which include the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund, are expected to have enough revenue to cover benefits and administrative costs through 2034—one year earlier than previously forecasted. After depletion, about 81% of combined benefits would still be payable.
While current law prohibits merging these funds, Congress has authorized transfers during shortfalls before. The Disability Insurance fund is projected to remain solvent until at least 2099.
Medicare Hospital Insurance Fund Also Faces Shortfall
The Medicare Hospital Insurance trust fund, which finances Medicare Part A services, is expected to run out by 2033—three years earlier than last year’s projection—with approximately 89% of benefits payable thereafter.
The new Social Security trustees’ report reflects the impact of the Social Security Fairness Act, which enhanced benefits for certain public pensioners and was enacted in 2025. Experts note, however, that recent developments such as new tax proposals, tariffs, and deportations were not included in the analysis and could threaten program financing.
Funding and Policy Options
Social Security and Medicare are funded primarily through payroll taxes, with workers and employers each contributing 6.2% for Social Security and 1.45% for Medicare. Self-employed individuals pay a combined rate of 15.3%.
To address the looming shortfall, Congress faces tough choices: raising taxes, cutting benefits, or a combination of both.
Approximately 70 million Americans currently receive Social Security benefits, supported by payroll contributions from roughly 185 million workers. The financial stability of these programs remains a top priority for the administration, which urges Congress to strengthen the trust funds.
Advocacy groups emphasize the urgency of action, warning that without reform, beneficiaries will face significant cuts or increased tax burdens. A recent survey found strong public opposition to benefit reductions, with 85% of Americans preferring tax increases to sustain the program.
One popular proposal is eliminating the payroll tax cap for earnings above $400,000—a cap currently set at $176,100. Many respondents also support a gradual increase in payroll tax rates from 6.2% to 7.2% for both employees and employers.
Author’s Opinion
Social Security and Medicare are critical to the financial security of millions, yet their trust funds face depletion within a decade. Delaying reform risks harsh benefit cuts or steep tax increases that would hurt seniors and working families alike. Public opinion strongly favors raising revenues over cutting benefits, sending a clear signal to lawmakers. Prompt, responsible policy changes are essential to protect these programs for current and future generations. Time is running out.
