According to a recent report, the funding for America’s Social Security program is on track to fall short by 2032, potentially impacting retirement benefits. This looming issue centers around the trust funds that are vital for disbursing monthly benefits to approximately 70 million citizens, which are primarily sustained through payroll taxes.

The challenge arises from demographic shifts: an aging population coupled with declining birth rates means fewer workers are contributing to the system, while the number of retirees continues to grow. Additionally, the trend of increased life expectancy means that individuals are drawing benefits for longer periods.

The Congressional Budget Office (CBO) has highlighted that the Old-Age and Survivors Insurance trust fund, responsible for distributing benefits to retirees and their families, will only be able to maintain full payouts for the next six years. This projection is a year ahead of the previous estimates provided by Social Security trustees.

While benefits may not completely vanish if Congress does not intervene, the funds from ongoing payroll taxes would be insufficient to meet the full promised payments. Consequently, this shortfall could lead to substantial reductions in monthly checks, cutting benefits by several hundred dollars each month to align with the available revenue.

If lawmakers fail to step in before then, benefits would not disappear entirely – since payroll taxes would still flow into the system. 

But they would not be nearly enough to cover promised payments, meaning monthly checks would  have to be cut by hundreds of dollars a month to match incoming revenue. 

As well as an aging population, Romina Boccia, director of budget policy at the Cato Institute, said the earlier depletion date reflects ‘higher cost-of-living adjustments and lower expected revenues’ – largely caused by lower tax receipts. 

She said President Donald Trump’s One Big Beautiful Bill, which cut tax bills, had made things worse.  She described the expansion of senior tax breaks as a ‘blatant vote-buying effort.’ 

Romina Boccia said: ‘It´s a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle’

Boccia added: ‘Congress should recognize that political giveaways for seniors come at the cost of younger workers, who are more likely to live in poverty and have significantly less wealth than seniors.’

The CBO’s 2032 projection refers specifically to the Old-Age and Survivors Insurance trust fund – the pot of money that pays retirement benefits.

Social Security is supported by two legally separate trust funds. Alongside the retirement fund is the Disability Insurance trust fund, which covers benefits for disabled workers.

Analysts often combine them to assess the program’s overall health. 

On that basis – since the disability fund is in somewhat stronger shape –  the money is projected to run dry in 2033. That is a year later than the retirement fund on its own, but still worryingly soon, experts warn. 

In a report last year, Social Security fund trustees estimated that money running out in 2033 would mean an across-the-board reduction of roughly 20 percent.

That would translate into a sharp hit for millions of retirees. As of January, the average monthly Social Security retirement benefit stood at $2,071, according to the Social Security Administration. A 20 percent cut would reduce that by more than $400 a month.

This would be a huge blow to older Americans. According to AARP, 40 percent of Americans aged 65 and older rely on Social Security for at least half of their income. About 14 percent depend on it for 90 percent or more.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, warned that the nation’s deficits and trust funds are ‘in terrible shape’ as Social Security’s projected insolvency date moves closer

AARP CEO Myechia Minter-Jordan previously said: ‘Congress must act to protect and strengthen the Social Security that Americans have earned and paid into throughout their working lives’

Nancy Altman, president of advocacy group Social Security Works, said the new forecast should spur action.

‘It’s not uncommon for CBO and the Social Security trustees to have slightly different projections,’ she said. 

‘This is not cause for surprise or alarm, but it does underline that Congress should take action at some point in the next half-decade.’

Altman urged lawmakers to ‘protect and expand Social Security’ rather than cut it.

Others painted a bleaker picture.

‘There are no surprises here or bright spots of encouraging news. Our nation’s deficits, debt, interest payments and trust funds are all in terrible shape,’ said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Social Security is primarily funded through payroll taxes paid by workers and employers.

But as the population ages and birth rates fall, fewer workers are supporting more retirees. People are also living longer, collecting benefits for more years.

Social Security Administration Commissioner Frank Bisignano, sworn into his role in May 2025, said in a statement that ‘the financial status of the trust funds remains a top priority for the Trump Administration’

Lawmakers have known about the looming shortfall for decades. The last major overhaul of Social Security came in 1983, when Congress gradually raised the full retirement age from 65 to 67.

Since then, Washington has largely avoided structural changes, wary of the political fallout from touching one of the country’s most popular programs.

Lawmakers have only a handful of options: raise payroll taxes, reduce future benefits, increase the retirement age, lift or eliminate the cap on taxable earnings, or some combination of the above.

Each route would be politically risky for Democrats and Republicans alike.