From the Peter Petersen Foundation
Social Security is an essential program for millions of Americans and helps support individuals in retirement and those with disabilities. However, Social Security’s retirement program is at risk — if lawmakers fail to take action, the Old-Age and Survivor’s Insurance (OASI) Trust Fund could be depleted in just 6 years. Below are nine key facts about Social Security’s retirement program, why it is in financial trouble, and what we can do to strengthen it for the long run.
1. Social Security retirement benefits provide vital economic security to older Americans.
Many low-income seniors rely on Social Security retirement benefits for most of their annual income. In fact, the bottom 20 percent of earners receive over 80 percent of their retirement income through the program. In 2025, 15 percent of adults age 65 and older had income below the poverty line. Without Social Security, about three times as many people (48 percent of all adults age 65 and older or 31 million) would fall below the poverty line.
2. America is getting older, and that’s straining the system.
Social Security was designed as a “pay-as-you-go” system, with current employers and employees funding the programs, providing benefits to Social Security recipients. However, the nation’s changing demographics have caused the number of workers relative to the number of retirement beneficiaries to decline — slipping from 4.3 to 2.9 over the past 60 years. The ongoing retirement of the Baby Boomer generation will exacerbate that trend.
3. Social Security’s asset reserves are at risk of depletion in the next decade.
Cash flows for the Social Security retirement program flow through the OASI Trust Fund, which pays benefits to retired workers and their auxiliary beneficiaries as well as to survivors of deceased insured workers. According to the Social Security Trustees, the OASI Trust Fund will be unable to pay full benefits starting in 2032.
4. Doing nothing means an automatic cut to retirement benefits.
The Social Security Trustees reported that the retirement program faces serious financial shortfalls. In fact, if lawmakers fail to act by 2032, payments to beneficiaries would automatically be set equal to the program’s incoming revenues — meaning there would be an automatic 22 percent benefit cut to 71 million OASI beneficiaries.
5. Social Security accounted for 22 percent of the federal budget in 2025.
Spending on Social Security, which includes the program’s outlays on non-retirement benefits, totaled $1.6 trillion in 2025, making it the single largest component of federal spending.
6. Most of the OASI Trust Fund’s revenues comes from payroll taxes.
Employers and employees each pay 6.2 percent of wages to fund Social Security; of that amount, 5.3 percent is dedicated to fund the OASI Trust Fund (the remaining amount is allocated to the Disability Insurance Trust Fund). Earnings subject to the tax are capped at $184,500 in 2026. In 2026, 91 percent of OASI revenues came from that dedicated payroll tax. The remaining revenues came from interest earnings and the taxation of benefits.
7. Every year, the OASI Trust Fund pays out more than it takes in.
Primarily due to an aging population and revenues that have not kept pace with expenses, the OASI Trust Fund has incurred a deficit since 2010. In 2025, the OASI Trust Fund spent $269 billion more than it brought in, and that gap is expected to widen to $402 billion in 2035. In total, the OASI Trust Fund is projected to incur cash deficits of $4.1 trillion over the decade.
8. Younger generations would face the largest reductions in benefits if Social Security is depleted.
Americans born in the 1970s, 80s, and 90s stand to have their lifetime benefits reduced by 21 percent or more, while those born in the 1950s and 60s would see their benefits decreased by 8 and 16 percent, respectively. While all birth cohorts would see a benefit reduction, today’s young workers have the largest stake in ensuring the solvency of the program.
9. The sooner lawmakers act, the better — and there are many well-known solutions.
The OASI Trust Fund is just 6 years away from depletion — the closest it has ever been to exhaustion since reforms in 1983. While policymakers still have time to correct the imbalance between the program’s spending and revenues, delaying reforms comes at a cost. The longer policymakers wait to take action, the more tax increases or benefit reductions will be needed to stabilize the program.
Social Security provides a safety net for tens of millions of Americans, many of whom are among the country’s most vulnerable. With the depletion of the OASI Trust Fund just 6 years away, now is the time for lawmakers to address the imbalance of spending and revenues driving the yearly shortfalls. Numerous options are available, and the quicker reforms are enacted, the easier the burden will be.