A new annual report from Social Security’s trustees reveals that the program will be unable to fully disburse monthly benefits to millions of retirees and individuals with disabilities by 2034 unless Congress intervenes to address its financial shortfalls.
The report notes that the combined Social Security trust funds, which support payments for the elderly, survivors, and those with disabilities, are projected to be depleted one year earlier than previously estimated. By 2034, payroll tax revenue and other income sources will cover only 81% of the benefits owed.
This grim forecast is attributed to multiple factors, including a recent law that enhanced benefits for certain workers and the trustees’ belief that the national fertility rate will take longer to rebound from historically low levels. Moreover, they expect average earnings to grow at a slower pace in the coming decade.
The financial outlook for Medicare has also worsened. Its hospital insurance trust fund, known as Medicare Part A, is now expected to provide coverage for inpatient hospital benefits until 2033, instead of the previously projected 2036. When the fund reaches its limit, it will be able to cover only 89% of the total scheduled benefits, which include hospice care and various post-hospitalization services.
The trustees have revised their projections for Medicare’s trust fund drainage, as they anticipate increased medical expenditures in 2024 and elevated growth rates for inpatient and hospice services in the coming years. In contrast, the trust funds for Medicare Part B, covering physician services and medical supplies, and Part D, covering prescription drugs, remain financially stable due to beneficiary premiums and federal contributions that adjust annually. For 2026, the Medicare trustees project that the standard monthly Part B premium will rise to $206.50 from $185, although this figure will not be finalized until later this fall.
A significant contributor to the expedited insolvency of Social Security’s trust fund was a bipartisan bill passed late last year, which increased benefits for nearly 3 million public sector employees. The Social Security Fairness Act repealed two policies that previously reduced Social Security payments for these workers. Critics, such as Romina Boccia, director of budget and entitlement policy at the Cato Institute, labeled it a “political giveaway masquerading as reform.”
“Instead of tackling Social Security’s structural imbalances, Congress chose to increase benefits for a vocal minority — accelerating trust fund insolvency by 6 months in the process,” Boccia stated. She added that this shift indicates that populist pressures have overtaken fiscal responsibility.
Exclusively considering the trust fund that finances retirement and survivor benefits, Social Security will be unable to fully meet scheduled payments by 2033, which is three fiscal quarters sooner than last year’s estimate. At that point, reserves will be exhausted, leaving ongoing income to cover only 77% of the benefits owed. Meanwhile, the Disability Insurance Trust Fund is expected to maintain full benefits until at least 2099. Although merging the two trust funds requires legislative action, the combined projection informs the overall status of the program.
As of the end of 2024, over 60.1 million individuals received Social Security retirement and survivor benefits, while 8.3 million Americans received disability benefits. Additionally, around 67.6 million people were enrolled in Medicare.
The sustainability of Social Security and Medicare remains precarious due to an aging population, leading to a rise in beneficiaries paired with a decrease in contributing workers. Increased healthcare usage and spending further complicate this financial landscape. Despite these challenges, the programs are not expected to run out of money entirely; current workers continue to contribute payroll taxes that support both systems. However, anticipated revenues may fall short of fully covering benefits once the trust funds are exhausted.
Despite the impending crises, experts suggest Congress may not act swiftly. With GOP legislators focused on advancing President Donald Trump’s agenda and the president yet to propose solutions for extending the life of entitlement programs, the outlook remains uncertain.
Nancy Altman, president of Social Security Works, emphasized that “Any politician who doesn’t support increasing Social Security’s revenue is, by default, supporting benefit cuts.”
The longer Congress delays addressing the looming shortfall, the narrower their options may become. “As the date gets closer and closer, Congress really needs to start getting more focused,” said Bill Sweeney, senior vice president for government affairs at AARP. “The American public expects them to get focused on this, to protect the money that they’ve earned.”
Potential solutions for Social Security’s fiscal challenges include increasing the payroll tax rate, raising the minimum age for benefit collection, adjusting the income subject to payroll taxes, and modifying benefit growth rates, among other proposals. The trustees have advised that “Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”