Social Security's Trust Fund May Run Dry by 2032, Threatening 24% Benefit Cuts for Retirees
TC
Taylor Cromwell
SEC crypto enforcement · Apr 17, 2026
Source: DojiDoji Data Terminal
The Old-Age and Survivors Insurance Trust Fund could be exhausted in six years, according to the Congressional Budget Office. When the trust fund is depleted, Social Security will shift to a pay-as-you-go model. Under this model, monthly benefits could be cut by about 24% on average. A typical retired couple could see their annual benefits drop by roughly $18,400. Policymakers have not yet enacted reforms to prevent this outcome.
The Congressional Budget Office’s report comes as the Social Security trust fund’s potential insolvency has been on the radar since at least 2012. Political decisions over the past year, including tax cuts for certain groups, have worsened the fund’s revenue shortfall, according to the Committee for a Responsible Federal Budget. Aging demographics are also expected to push the fund’s expenses higher. By 2030, the number of people over the age of 65 will outnumber those under 18 for the first time in U.S. history.
When the trust fund runs out, the system will rely solely on current payroll tax revenue to fund current benefits. This shift means beneficiaries can still expect their payments, but likely at a reduced rate. The potential cut could vary based on age, marital status, and work history. About 59% of non-retired Americans are already worried about Social Security not being available by the time they stop working.
Congress acted decisively in the 1980s by raising payroll taxes and increasing the retirement age, which stabilized the system before the Baby Boomers started retiring. Similar reforms are now being considered. The Committee for a Responsible Federal Budget has outlined 10 options for policymakers, including increasing the payroll tax rate by one percentage point. Whether politicians will act remains uncertain.
Workers and retirees should prepare for the worst-case scenario. Stress-test your retirement budget to see if you could remain comfortable if benefit payments are reduced. Consider boosting your earnings over the next several years to increase the benefits you qualify for. You may also need to focus on personal savings, delay your Social Security claim, or work part-time during retirement.
