Social Security Trust Fund Now Projected to Run Dry in 2032: CBO
Instead of being depleted in 2033, a recent report from the non-partisan Congressional Budget Office (CBO) now says Social Security’s Old-Age and Survivors Insurance Trust Fund—the primary fund that pays benefits to retired workers, their families, and some survivors of deceased workers—will be exhausted in 2032.
That’s a year earlier than CBO forecasted in a report last year, and two years earlier than it forecasted in 2024.
In June 2025, the Social Security and Medicare Trustees Reports, released by the Treasury Department, found that the OASI Trust Fund will be able to pay 100% of total scheduled benefits until 2033. Absent Congressional action, that official report said in 2033 the fund’s reserves will become depleted and continuing program income would be sufficient to pay 77% of total scheduled benefits—meaning a 23% benefit cut.
The 2026 Social Security and Medicare Trustees Reports—which may or may not align with the latest CBO report—is expected to be released before July.
According to CBS News, the CBO changed its Social Security funding projection after updating its economic forecast, which predicts hotter inflation in the coming years. That could affect Social Security’s annual cost-of-living adjustment (COLA), which is aimed at ensuring that inflation doesn’t erode beneficiaries’ purchasing power.
The CBO also projects Social Security trust fund income will be lower because of a reduction in individual income taxes and payroll taxes.
Although the Social Security Administration (SSA) wouldn’t stop administering benefits if the trust fund reserves are depleted, the agency could be forced to dramatically trim the amount it pays to beneficiaries.
Unless Congress passes Social Security reform by the time the trust fund is depleted, it will trigger what is estimated to be a 24% automatic benefits cut. That means someone who receives a monthly benefits check of $2,000 would see it drop by $480 to $1,520.
Social Security is comprised of two trust funds: the aforementioned OASI Trust Fund, and the Disability Insurance (DI) Trust Fund, which pays benefits to eligible individuals (and certain family members) who are unable to work due to medical conditions.
The two funds could not actually be combined unless there were a change in the law, but the combined projection of the two funds is frequently used to indicate the overall status of the Social Security program. The combination of the two trust funds is referred to as the OASDI Trust Fund.
Both programs are funded through a 12.4% payroll tax, split between worker and employer, up to a maximum amount of wages. 10.6 percentage points go to the OASI trust fund and 1.8 percent to the SSDI trust fund.
According to the Peter G. Peterson Foundation, the main reason the outlook for Social Security has deteriorated over the last two decades is the nation’s changing demographics. The aging population has put pressure on the program as more people have become eligible for Social Security.
In 2010, there were 43 million people age 65 and older; by 2025 that amount had increased to 68 million people. At the same time, the number of workers contributing to the program has declined—from 2.9 covered workers per beneficiary in 2010 to 2.7 in 2025. The mismatch between beneficiaries and covered workers means fewer workers are contributing to the program at the same time that spending for beneficiaries continues to grow rapidly.
“Social Security’s finances are worsening, and lawmakers are running out of time to fix it,” concludes the Feb. 20, 2026 post from the Peter G. Peterson Foundation. “Nearly every year, the depletion date of the OASDI Trust Fund draws closer, and in just 8 years the combined trust fund will become insolvent, meaning potentially devastating benefit cuts for millions of Americans. While it would have been better for lawmakers to have acted earlier to shore up this critical program, options still exist—likely a combination of both raising revenues and reducing spending—to secure the trust funds. The longer lawmakers wait to act, though, the more abrupt and difficult the changes will be to implement.”
Potential fixes include raising the full retirement age (currently 67), increasing payroll taxes, lifting the cap on taxable earnings, or reducing the annual COLA.
SEE ALSO:
• Latest 2027 Social Security COLA Forecast Holds at 2.8%
• Social Security Solvency Clock Ticking as Wait Drags On for 2025 Trustees Report
• 2025 Social Security Trustees Report Shows 23% Benefit Cut on Tap by 2033
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.