The Trustees of the Social Security and Medicare Trust Funds issued their annual reports in June 2026. The Social Security report found that the Old-Age and Survivors Insurance (OASI) Trust Fund, which supports Social Security retirement and survivor benefits, is projected to be depleted by the fourth quarter of 2032, one quarter earlier than reported last year.
Despite this, Social Security would not disappear. After the OASI Trust Fund is depleted, continuing program income is projected to be sufficient to pay 78% of scheduled retirement and survivor benefits. If Congress were to combine the OASI and Disability Insurance Trust Funds, the combined program could pay full scheduled benefits until the third quarter of 2034, after which continuing income would be sufficient to pay 83% of scheduled benefits.
An analysis by PensionBee estimates that those retiring in 2032 would need an additional $137,280 in retirement savings to make up for the shortfall in Social Security. If the federal government fails to act, that number could continue to increase.
Recent Tax Law Reduces Projected Trust Fund Revenue
The long-term challenges to Social Security’s finances are not new. The number of retirees is growing and the number of workers contributing to Social Security is declining. The One Big Beautiful Bill Act deepens the funding problems by reducing taxes that pay for the program.
- More Retirees
The fundamental problem facing Social Security and Medicare is the aging of the population. With the retirement of the Baby Boom generation, more retirees are receiving benefits for a longer period of time.
- Fewer Workers
The largest source of funding for Social Security and Medicare benefits is the taxes paid by today’s workers. With lower birth rates and lower projected immigration, there are fewer workers paying into the programs. For example, in 1960, there were 5.1 workers for each Social Security beneficiary; in 2024, there were 2.7. Government actuaries now predict that birthrates will remain lower for longer.
- One Big Beautiful Bill Act
The One Big Beautiful Bill Act reduced income tax rates and increased income tax deductions. As a result, projected Social Security Trust Fund revenue from income taxes paid on benefits is lower than what had been projected last year.
How the Trust Funds Work
Payroll taxes from today’s workers go into the Trust Funds. In the past, when payroll taxes and other income exceeded benefit payments, the Social Security and Medicare Trust Funds built up reserves. Over the last several years, the Social Security Administration tapped these reserves to supplement the shortfall in payroll taxes and other income to meet Social Security’s and Medicare’s current financial obligations.
Social Security consists of two programs, each with its own Trust Fund. Retired workers and their families and survivors receive monthly benefits under the OASI program; disabled workers and their families receive monthly benefits under the Disability Insurance (DI) program.
The OASI Fund’s reserves are projected to be depleted by the fourth quarter of 2032, one quarter sooner than reported last year. Once depleted, Trustees estimate scheduled benefits could be reduced to 78% of total scheduled benefits.
Reserves in the DI Trust Fund, which is on stronger footing, are projected to be sufficient through at least 2100, the last year of the report’s projection period.
Medicare also has two Trust Funds. The Hospital Insurance (HI) Trust Fund pays for inpatient and hospital care under Medicare Part A. The HI Trust Fund will be able to pay 100 percent of total scheduled benefits until the second quarter of 2033, one quarter earlier than reported last year. At that point, the HI Trust Fund’s reserves will become depleted and continuing program income will be sufficient to pay 89% of total scheduled benefits. Please note that projections of Medicare costs, like projections of health care costs generally, are highly uncertain.
The Supplementary Medical Insurance (SMI) Trust Fund comprises two accounts: one for Medicare Part B physician and outpatient costs and the other for Medicare Part D prescription drug coverage. The SMI Trust Fund for Medicare Parts B and D is adequately financed into the indefinite future because, unlike the other trust funds, its main financing sources—enrolled beneficiary premiums and the associated federal contributions from the Treasury—are automatically adjusted each year to cover costs for the upcoming year. Although the financing is assured, the rapidly rising SMI costs have placed steadily increasing demands on beneficiaries and general taxpayers.
Possible Fixes
If Congress does not take action, Social Security beneficiaries will face a benefit cut after the Trust Funds are depleted in 2032. Any permanent fix to Social Security is likely to require a combination of the following changes.
- Combine the OASI and DI Trust Funds. Combining the two trust funds would allow Social Security to pay full scheduled benefits until the third quarter of 2034. At that point, the combined program could pay 83% of total scheduled benefits – compared to 78% based on OASI alone.
- Raise the Social Security payroll tax rate, currently 12.4% (for employees paying FICA, half of this is paid by the employee and half by the employer; those paying SECA, such as clergy and self-employed individuals, are responsible for paying the full amount). The Trustees estimate that an immediate and permanent payroll tax increase to 16.65% would be necessary to address the long-range revenue shortfall.
- Raise the ceiling on wages subject to Social Security payroll taxes, which is $184,500 in 2026.
- Raise the full retirement age, currently 67 for anyone born in 1960 or later. Historically, this type of change has applied to future retirees, not those in or nearing retirement.
- The OASI fund depletion triggers a 22% benefits cut, but a larger 25.2% reduction is needed for 75-year solvency.
- Use a different index to calculate the annual cost-of-living adjustment.
Why This Matters for You
Social Security is not expected to disappear. However, if Congress does not act, future benefits may be lower than scheduled under current law. PensionBee estimates that those retiring in 2032 could need an additional $137,280 in retirement savings to offset the potential reduction in Social Security benefits.
For JRB participants, the message is not to panic. The message is planning. Your JRB Retirement Plan account, personal savings, Social Security claiming strategy, and expected retirement expenses should all be reviewed together.
Are your JRB Retirement Plan contributions sufficient to prepare you for changes in Social Security that may reduce your future benefits? Stress test your retirement plan with a complimentary financial consultation to determine if you are on track. Call the JRB at 888-JRB-FREE (572-3733) to set one up.
View a summary of the 2026 Social Security and Medicare Trustees Reports.
June 2026