When Will Social Security Run Out of Money?
Get clear answers on Social Security's financial outlook. Understand its viability, what challenges it faces, and how it can be secured.
Social Security provides retirement, disability, and survivorship benefits to millions across the United States. Its long-term financial stability is a frequent subject of public discussion, as many individuals rely on it for a substantial portion of their income. Understanding how Social Security is funded is key to comprehending its future outlook.
How Social Security is Funded
Social Security is primarily funded by dedicated payroll taxes: Federal Insurance Contributions Act (FICA) taxes for employees and employers, and Self-Employment Contributions Act (SECA) taxes for self-employed individuals. For 2025, employees and employers each contribute 6.2% of wages up to a taxable maximum of $176,100. Self-employed individuals pay the combined 12.4% on their net earnings up to the same limit. This “pay-as-you-go” system means current payroll taxes largely finance benefits for current beneficiaries.
Revenues exceeding immediate payments are held in two trust funds: the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. These funds invest reserves in special U.S. Treasury securities. Additional income comes from federal income taxes on some Social Security benefits and interest earned on investments.
Official Projections for Trust Fund Depletion
Official projections from the Social Security Administration’s (SSA) Board of Trustees provide insights into the program’s financial future. The 2025 Trustees Report projects the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds will have sufficient reserves to pay all scheduled benefits until 2034. After this, the trust funds’ reserves are projected to be depleted. Depletion does not mean the program will cease or be unable to pay any benefits.
Instead, after 2034, Social Security could still pay a significant portion of scheduled benefits from ongoing payroll tax revenues. The 2025 Trustees Report indicates approximately 81% of scheduled benefits would be payable from continuing income. The OASI Trust Fund, covering retirement and survivor benefits, is projected to be depleted in 2033, able to pay about 77% of scheduled benefits. The DI Trust Fund, providing disability benefits, is projected to remain solvent throughout the 75-year projection period, extending beyond 2098.
Key Drivers of Social Security’s Financial Outlook
Social Security’s financial outlook is shaped by demographic and economic factors. A significant demographic challenge is the aging population. Declining birth rates mean fewer workers support a growing number of retirees. Increased life expectancy means beneficiaries receive benefits for longer periods.
The large baby-boomer generation, born between 1946 and 1964, is now largely in or approaching retirement, leading to a higher ratio of beneficiaries to contributing workers. This imbalance pressures the pay-as-you-go system.
Economic factors also affect the program’s financial health. Slower wage growth impacts payroll tax revenue, as the Social Security tax applies to earnings up to a limit. These trends project current tax income will be insufficient to cover 100% of scheduled benefits long-term, leading to trust fund depletion.
Approaches to Strengthening Social Security
Various approaches address Social Security’s long-term financial stability. One involves adjusting the full retirement age, gradually increasing the age individuals can claim full benefits. This aligns with changes in life expectancy, requiring individuals to work longer.
Another option is modifying the payroll tax rate, such as incrementally raising the 6.2% contribution rate for employees and employers. Changes to the taxable earnings cap are also discussed. Currently, Social Security taxes apply up to an annual income threshold of $176,100 in 2025. Raising or eliminating this cap would subject more higher earners’ income to Social Security taxes.
Adjustments to the benefit calculation formula, such as modifying cost-of-living adjustments (COLAs) or indexing benefits to prices rather than wages, are another approach. Broadening the payroll tax base to include income types not currently subject to Social Security taxes, or expanding coverage to more state and local government employees, could also strengthen the program’s finances.