empty wallet seniors
Millions of Americans depend on their monthly Social Security payments, but the trust fund backing these essential benefits is projected to be exhausted earlier than anticipated.
Approximately 70 million older Americans count on Social Security as a primary income source, particularly as they face mounting financial strain from persistent inflation and escalating healthcare expenses. Recent data from the Social Security Administration shows that nearly 9 in 10 individuals aged 65 and above receive benefits, with these crucial payments representing 31% of income for that demographic.
The trust fund supporting these payments is now depleting at a faster rate than initially forecast, potentially leading to significant reductions in the amounts seniors receive from the agency.
The Congressional Budget Office, a nonpartisan analytical body serving Congress, announced last month that it anticipates the Old-Age and Survivors Insurance Trust Fund – one of two funds financing Social Security benefits – will be exhausted by 2032.
This updated forecast is one year earlier than the CBO’s previous estimate. Last year, projections indicated the trust fund would be depleted in 2033.
The Social Security trust fund is expected to become insolvent by 2032 (Image: Getty Images)
What’s causing the Social Security trust fund’s insolvency?
The Committee for a Responsible Federal Budget indicated that Social Security recipients, regardless of age or income level, would experience a 24% reduction in benefits when the trust fund runs dry in 2032. For the average retired couple, this would mean an $18,400 cut in benefits.
“Social Security has been on a path toward insolvency for some time – but over the past year, politicians have made its financial condition even worse,” CRFB stated in its report.
The Social Security and Medicare Boards of Trustees also sounded the alarm about the agency’s trajectory toward insolvency in a letter accompanying its 2025 annual reports, noting, “As in prior years, we found that the Social Security and Medicare programs both continue to face significant financing issues.”
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Social Security receives funding through payroll taxes, interest earned on trust fund balances, and income taxes levied on Social Security benefits. However, payroll tax revenue has fallen short of keeping pace with the expanding benefits obligations, and the OASI trust fund, which traditionally fills the shortfall, is now being drained.
Without supplementary funding to close the deficit, countless older Americans could see reductions to their monthly checks within the next decade.
“By reducing income tax rates paid by seniors, the recently enacted reconciliation law – the One Big Beautiful Bill Act (OBBBA) – reduced revenue flowing into the Social Security trust fund from the income taxation of benefits,” the report explained. President Donald Trump’s new tax deduction on Social Security is accelerating the depletion of the trust fund.
Social Security Chief Actuary Karen Glenn projected in a letter last year to Sen. Ron Wyden, D-Oregon, ranking member of the Senate Finance Committee, that the OBBBA tax cut could drain the trust fund by approximately $168.6 billion over 10 years.
The CRFB also outlined that the bipartisan Social Security Fairness Act, enacted last year, will reduce the trust fund by an additional $200 billion over 10 years.
Can the federal government prevent Social Security from running out?
The CRFB argues that trust fund solutions are urgently needed to avoid insolvency.
“To ensure the program survives another 90 years, lawmakers should pursue trust fund solutions to restore solvency and make other improvements,” it stated in the report.
Congress has available legislative options to safeguard Social Security from insolvency, but has yet to take action.
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