If you have read a headline this year about Social Security “running out of money,” it is worth pausing on what that phrase does and does not mean. The program is not disappearing. But the trust funds that supplement it are on a timeline, and understanding that timeline changes how you should think about your own retirement income plan.
How the Trust Funds Actually Work
Social Security operates through two separate trust funds. The Old Age and Survivors Insurance (OASI) fund covers retirement and survivor benefits, while the Disability Insurance (DI) fund covers disability benefits. Neither is a vault of cash. Both are accounting ledgers that hold special issue U.S. Treasury bonds. When payroll taxes collected in a given year exceed the benefits paid out, the surplus is invested in these bonds. When benefits exceed payroll tax revenue, bonds are redeemed to cover the difference.
A Shrinking Worker to Retiree Ratio
Social Security is a pay as you go system. Today’s workers fund today’s retirees, and that math works only as long as there are enough workers relative to retirees. That ratio has been falling for decades:
- 1960: about 5.1 workers per retiree in 1960
- 1990: about 3.4 workers per retiree in 1990
- 2024: about 2.7 workers per retiree in 2024
- 2035 (projected): a projected 2.3 workers per retiree by 2035
Source: Social Security Trustees Reports.
A few forces are driving this shift. The Baby Boom generation, born between 1946 and 1964, is retiring in large numbers. Longer life expectancies mean retirees collect benefits over more years. Lower birth rates mean fewer workers are entering the system to replace them. As a result, the program has been running a cash flow deficit since approximately 2010.
The Current Solvency Timeline
Per the 2026 Social Security Trustees Report, released June 9, 2026, here is where each trust fund stands.
- OASI (retirement and survivor benefits), alone: projected depletion in the fourth quarter of 2032, at which point benefits would face an automatic cut of approximately 22 percent
- DI (disability benefits), alone: not projected to deplete until 2100 or beyond, so it carries minimal near term risk
- Combined OASDI: projected depletion in the third quarter of 2034, with an automatic cut of approximately 17 percent
These dates moved up from the prior report. The OASI depletion date is now one quarter earlier than the 2025 report projected, and the combined OASDI depletion date held roughly steady at 2034. Depletion does not mean Social Security goes to zero. It means the reserve funds run out, and the program can only pay what comes in from payroll taxes in real time, roughly 78 to 83 cents on the dollar depending on the fund.
What Happens If Congress Does Nothing
Under current law, if no legislative action is taken by approximately 2032 to 2034, the following would occur automatically.
- A retiree receiving $2,000 a month would see that check drop to approximately $1,660 to $1,720 a month.
- The cut would apply simultaneously to all beneficiaries: retirees, survivors, and disabled workers.
- There is no legal mechanism to protect some beneficiaries over others without new legislation.
What Is Accelerating the Problem
- Social Security Fairness Act (January 2025): the repeal of WEP and GPO adds roughly $196 billion in costs over ten years
- 2025 federal tax law changes: reduced federal revenue flowing into the trust funds, per the 2026 Trustees Report
- Updated fertility and immigration assumptions: fewer future workers than previously projected
- Record COLA payments (8.7 percent in 2023): permanently raised the benefit base for all recipients
- Longer life expectancies: more years of benefit payments per retiree
- Slowing wage growth: reduces payroll tax revenue relative to obligations
The 75 Year Funding Gap
The Social Security Administration’s actuaries now estimate the 75 year actuarial deficit at approximately 4.42 percent of taxable payroll, up from 3.82 percent in the 2025 report and 3.3 percent in the 2024 report, a meaningful one year jump. To close the current gap entirely with a single lever, Congress could raise the payroll tax from 12.4 percent to approximately 16.8 percent immediately and permanently, cut all benefits by approximately 22 percent immediately and permanently, rising to roughly 38 percent by 2100, or, most likely, phase in some combination of both through bipartisan legislation.
What Congress Could Do
- Raise the payroll tax rate: increases revenue and extends solvency
- Lift or eliminate the $184,500 wage base cap: high earners pay more, providing a large revenue boost
- Raise the full retirement age, for example to 68 or 69: reduces lifetime benefits and is politically difficult
- Means test benefits: targeted cuts for higher income beneficiaries
- Invest trust funds in equities: higher potential returns, but introduces market risk
- Increase immigration: more workers improves the worker to retiree ratio organically
A Precedent Worth Remembering: 1983
The last time Social Security faced imminent insolvency was 1983. The Greenspan Commission reforms extended solvency by approximately 50 years by gradually raising the full retirement age from 65 to 67, making a portion of benefits taxable for higher earners, bringing federal employees into the Social Security system, and accelerating scheduled payroll tax increases.
A similar bipartisan deal is the most likely eventual outcome this time as well. Based on the current timeline, Congress has approximately six years to act before the OASI fund is depleted. History suggests Congress will wait until the deadline is very close before acting, which is exactly why it makes sense to plan around a range of outcomes rather than wait for certainty.
What This Can Mean for Your Plan
- Retiring in the next five to six years: likely unaffected, though the window for congressional action is narrowing
- Retiring in the late 2020s through the 2040s: some risk; model conservatively at 75 to 80 percent of your projected benefit
- Younger clients, under 50: should not count on full benefits; build independent retirement savings
- All clients: claiming strategy matters; locking in a higher benefit now provides more cushion against future cuts
Every one of these scenarios is exactly the kind of question we work through with clients individually, because the right response depends on your age, your savings, your other income sources, and your goals. If you would like to talk through what this timeline means for your specific plan, reach out to your advisor.
Source: 2026 Social Security Trustees Report (released June 9, 2026); Congressional Budget Office; Social Security Administration.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.