Will Social Security run out of money before you retire? What about Medicare?
There’s not much good news regarding the Social Security and Medicare trust funds, which help pay for these benefits. But relax; neither program is expected to stop paying benefits altogether, no matter if the trust funds turn insolvent.
The trust funds are primarily funded by current tax payments. Unless everyone stops working and paying taxes, beneficiaries will continue to receive some Social Security benefits and Medicare coverage.
The 2025 annual Social Security and Medicare trustees report, released last June, provided the latest Trustee projections. The Congressional Budget Office (CBO) released its own updated estimates in February, and it moved up the insolvency dates for the Social Security (OASDI) and Medicare hospital insurance (HI) trusts.
When Trustee's Reports say the Medicare and Social Security trusts will go insolvent
1. The Hospital Insurance fund for Medicare Part A is expected to be able to fully pay scheduled benefits until 2033, three years sooner than last year’s projection, according to a 2025 report (PDF). When the trust fund is depleted, program tax income is expected to be sufficient to pay 89% of projected benefits.
2. The Disability Insurance Trust Fund is in the best shape of the three trusts. That fund is projected to be able to pay 100% of scheduled benefits through at least 2099, which is as far out as the report projects. In other words, it’s not expected to run out of money at all. This is an extension of last year’s projection, which also didn’t predict the fund running out of money before 2098, the last year of that report’s prediction period.
3. Now for the not-so-good news: The Old-Age and Survivors Insurance Trust Fund that pays Social Security retiree benefits is projected to run out in 2033, according to the 2025 estimates by the trustees. This is the same depletion year as predicted in 2024; however, the estimated depletion date moved up three calendar quarters to the first quarter of 2033. If this comes to pass, benefits would be cut by 23%, and beneficiaries would then receive 77% of their benefits.
What made the projections change?
Trustees for Social Security revised their projections in 2025 based on updated inflation and economic output data. They maintained their projected levels of gross domestic product and labor productivity from last year.
The Hospital Insurance fund projection was decreased due to higher-than-expected spending on hospital and hospice care in 2024. The trustees also increased future projected spending to account for that growth, including more spending for inpatient and hospice services in the early years of the projection.
According to the Center on Budget and Policy Priorities, a bipartisan Social Security financing deal in 1983 enabled Social Security to run a surplus each year until 2021. Then, in 2021, Social Security’s total cost exceeded its income, and it began to pull funds from reserves.
The trust funds’ reserves supplement the program’s income — from payroll taxes, income taxes on benefits paid to higher-income beneficiaries, and interest earned on the trust funds’ bonds — allowing Social Security to keep paying full benefits until the reserves are depleted.
Contrary to the fears of some retirees, benefits will not cease if Social Security’s trust funds run out of Treasury bonds to cash in. Income tax revenue would enable Social Security to continue paying about 77% of benefits.
Why are the funds inadequate?
According to the Bipartisan Policy Center's 2025 trustee report, demographics are a major driver of the coming Social Security shortfall. There are fewer workers paying taxes to support retirees.
The ratio of workers paying Social Security payroll taxes to people drawing benefits has dropped from four-to-one in 1965 to just under three-to-one in 2022. It's projected to drop to less than 2.5-to-one by the middle of the century.
About one out of every five U.S. residents, or 67 million people, collected Social Security benefits in February 2023, according to the Center on Budget and Policy Priorities. That number increased to 69.628 million people in May of 2025.
Those trends are only worsening.
A January 2026 report by the Congressional Budget Office projected demographic outlook asserted that "the segment of the population age 65 or older is projected to grow more quickly, on average, than younger groups, causing the average age of the population to rise." They also estimate that deaths would surpass births in 2030, three years earlier than their prediction last year. This can further exacerbate solvency issues.
Another issue, according to the latest Social Security Trustees report, concerns income disparities and the cap on the amount of income subject to Social Security taxation.
Social Security’s payroll tax, which covered 90% of total earnings in 1983, is projected to cover just 83% this year because top earners' income has grown much faster than lower earners, placing more earnings above the taxable cap of $176,100 in 2025.
Proposals to bolster the trust fund and save Social Security range from increasing taxes on higher-income earners to raising the retirement age.
Latest Congressional Budget Office estimates show the situation getting worse
The updated insolvency estimates for Social Security and Medicare show a worsening financial outlook compared to last year's projections, based on the Congressional Budget Office (CBO) publications from February 2026. The CBO cited three primary drivers of the accelerating insolvency dates: (1) provisions included in the 2025 Reconciliation Act that created the senior deduction that reduces revenue to the trust, (2) higher-than-expected Part A spending in 2025 and increased Medicare Advantage costs in 2026, and (3) demographic shifts showing a more rapidly aging population and a slowdown in the growth of the number of workers paying payroll taxes.
The Old-Age and Survivors Insurance (OASI) trust fund is now projected to be exhausted in Fiscal Year 2032. This is roughly one year earlier than was estimated in 2025. The CBO estimates that this would result in an immediate across-the-board benefit cut of 28% in 2033, the first full year after exhaustion. That cut is 5% higher than the previously projected reduction of 23%.
The Medicare Hospital Insurance (HI) Trust Fund, which covers Part A services, has also had its insolvency date accelerated. The CBO and the Medicare Trustees have different insolvency dates for the hospital trust. The 2025 Trustees Report estimates the HI trust will go insolvent in 2033. However, the CBO is now projecting the trust to be exhausted in 2040. This is 12 years earlier than the CBO estimate from 2025.
Recent changes to Social Security are accelerating the insolvency
We're at the tail end of raising our full retirement age to 67. I mention this point because raising the full retirement age from 65 to 67, albeit gradually, was an important aspect of shoring up the Social Security trust fund in 1983 when the Social Security Amendments of 1983 were passed. We're in the final stages of the 42-year phase-in of legislation passed in 1983.
The Social Security and Medicare trust funds are in trouble, and as of late, politicians have only made the problem worse. Both Presidents Joe Biden and Donald Trump signed legislation that will accelerate the insolvency date of the Social Security trust funds.
Biden signed the Social Security Fairness Act (SSFA), which increased payments for certain public-sector employees. Trump's signature legislation, the One Big Beautiful Bill (OBBB), will reduce the amount of money flowing into the trust by making benefits for older Americans with income below a certain threshold less taxable. Here are the details on both policy changes.
The Social Security Fairness Act. One important provision enacted in 1983 was the Windfall Elimination Provision (WEP), which reduced Social Security benefits for individuals who received pensions from federal, state and local governments.
However, this measure, along with the Government Pension Offset (GPO), was repealed in 2025 and will contribute to the depletion of the Social Security trust fund by increasing payments to certain beneficiaries.
When the bill was scored by the Congressional Budget Office, it said the SSFA will cost approximately $195.7 billion over 10 years, and the balance of the Social Security retirement and survivor trust fund could be exhausted roughly half a year earlier than under the previous law (PDF).
The One Big Beautiful Bill. The bill, signed into law on July 4, 2025, affects the solvency of the Social Security and Medicare trust funds by reducing tax revenue that funds them. The reduction in taxation of benefits will "reduce total taxation of benefits by roughly $30 billion per year," according to the Committee for a Responsible Budget.
Most importantly, the group projects that the insolvency of the Social Security Old-Age and Survivors (OASI) trust fund will accelerate from early 2033 to late 2032; the insolvency of the Medicare Hospital Insurance Trust Fund would move up from late 2033 to mid-2032.
On the issue of insolvency, politicians are moving the needle in the wrong direction.
Note: A version of this item first appeared in Kiplinger’s Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.
