Social Security retirement fund projected to run dry in late 2032

Social Security's retirement trust fund will be exhausted in late 2032 — one quarter sooner than last year's forecast — leaving payroll taxes able to cover only 78 percent of promised benefits unless Congress acts, according to the program's annual trustees report released Tuesday.

The projection puts roughly 62 million Americans who receive retirement and survivors benefits on notice that the safety net they paid into over their careers could shrink within six years if lawmakers fail to raise revenue, adjust eligibility ages or reduce benefits.

The trustees' report, cited by ABC7 Los Angeles, shows the retirement fund moving toward insolvency one quarter sooner than projected in 2025. After the fund runs dry in late 2032, ongoing payroll taxes and other revenue would cover only 78 percent of scheduled retirement payments. The combined retirement and disability funds are separately projected to be exhausted in 2034 — unchanged from last year — at which point they could pay 83 percent of combined benefits. The Disability Insurance Trust Fund is projected to remain fully solvent through at least 2100.

Recent federal tax legislation contributed to the accelerated timeline. The One Big Beautiful Bill Act, signed in summer 2025, reduced taxes on Social Security benefits and provided enhanced deductions for seniors, lowering revenue flowing into the trust fund, according to ABC7 Los Angeles. "Congress made Social Security's finances even worse by giving seniors yet another tax break last year, while sending a bigger bill to younger workers tomorrow," said Romina Boccia, director of budget and entitlement policy at the Cato Institute.

Demographic shifts compounded the pressure. Trustees applied lower projections for fertility rates and reduced estimates for undocumented immigrants in the workforce — both changes that shrink the base of workers paying into a system supporting a growing retiree population. Nancy Altman, president of Social Security Works, said the report marks a political turning point. "This is the first Social Security trustees report that begins to take Donald Trump's second term policies into account," Altman said.

AARP CEO Myechia Minter-Jordan called for immediate congressional action. "This should be a wake-up call: Congress needs to act," Minter-Jordan said. She added: "Americans have worked hard and paid into Social Security their entire lives, and they deserve to count on it when they retire. No family should see any cuts to what they've earned in Social Security."

Medicare faces parallel challenges. The Part A hospital insurance trust fund is projected to be exhausted in the second quarter of 2033 — one quarter earlier than last year's estimate — after which it could cover 89 percent of scheduled benefits. Monthly Part B premiums are projected to rise from $202.90 in 2026 to $209.50 in 2027, according to the trustees report.

More than 69 million people were enrolled in Medicare last year, and 8 million Americans received disability benefits, according to ABC7 Los Angeles.

The annual trustees report carries no enforcement authority. Preventing the projected shortfall would require Congress to pass legislation — raising payroll taxes, adjusting benefit eligibility ages, cutting benefits or some combination — before the fund reaches insolvency.