Quick hits: The 2026 Social Security Trustees Report
As the Social Security trust funds get closer and closer to depletion, the window for gradual reforms is closing quickly.
The Social Security Trustees released their 2026 Annual Report last week, and the headline numbers are sobering. The Old-Age and Survivors Insurance (OASI) Trust Fund—the fund that pays retirement and survivor benefits to the 70 million Americans who receive them—is now projected to be depleted in the fourth quarter of 2032. Once the trust fund is depleted, benefits cannot exceed incoming payroll tax revenue, which is projected to be only 78 percent of scheduled benefits. One way or another, Congress will have to act in order to avoid extreme disruption to benefit payments. As months and years transpire without a resolution, uncertainty and confusion make it difficult for individuals and markets to plan and make it more likely that changes will be disruptive.
The latest report shows a bleak financial picture
While the OASI Trust Fund is a more immediate concern and is a distinct entity from the Disability Insurance Trust Fund, the combined Old-Age, Survivors, and Disability (OASDI) Trust Fund is often analyzed together since Congress has historically transferred funds between them. The OASDI Trust Fund is projected to be depleted in the third quarter of 2034. The 75-year actuarial deficit now stands at 4.42 percent of taxable payroll, meaning that the average annual gap between what the program is projected to collect and what it is projected to pay out is 4.42 percent of the total earnings subject to Social Security payroll taxes.
What does an actuarial deficit of 4.42 percent of taxable payroll mean? In dollar terms, the unfunded obligation over the 75-year window is $29.3 trillion. To close the gap today, Congress would have to enact policies to increase net collections by an amount equivalent to raising the payroll tax rate from 12.4 percent to 16.65 percent or reducing scheduled benefits for all current and future beneficiaries by 25%.
Changes in demographic assumptions and recent legislation were the major drivers of the worsened financial situation
The actuarial deficit of 4.42 percent represents an increase of 0.60 percent of taxable payroll since the 2025 Trustees Report. Since the program faces a long-run financing problem, the deficit is expected to increase each year as the 75-year valuation window includes more years where the program is in the red. However, an increase of 0.60 percentage points represents the biggest year-to-year change since 1994. What accounts for this change?
The biggest factor was a downward revision to the assumed long-run fertility rate, from 1.90 to 1.75 children per woman. Lower birth rates means fewer workers paying into the system in the future, all else equal, and thus makes the long-run financial picture worse. While the downward revision brings the Social Security actuaries’ projections closer to other predictions, the total fertility rate in 2024 was 1.60 children per woman and the Congressional Budget Office (CBO) projects that the total fertility rate will decline to a rate at or near 1.53 by 2036. This change alone accounts for a 0.35 percentage point increase in the actuarial deficit.
The second largest factor was a reduction in assumed immigration. The Trustees lowered both the near-term levels and assumed long-run flow of temporary and undocumented immigrants. Since immigrants tend to enter the workforce and pay payroll taxes that exceed benefits they are paid, fewer immigrants means less net revenue for the program overall. This change in isolation results in a 0.21 percentage point increase in the actuarial deficit.
A notable third factor is the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. Among its many provisions, the OBBBA made lower income tax rates and the expanded standard deduction from the 2017 Tax Cuts and Jobs Act permanent and created a temporary additional deduction for taxpayers over 65. Because a portion of Social Security benefits is subject to income taxation and credited back to the trust funds, lower income tax rates result in lower revenues for Social Security. The Trustees estimate that OBBBA worsened the 77-year actuarial balance by 0.16 percent of taxable payroll.
Some changes improved the program’s financial outlook, including updated mortality data and an improved outlook for labor productivity and earnings growth, and these changes counteract some of the negative impacts described above. However, the overwhelming picture is of a program in worse financial condition as time passes.
Further reading and commentary offers perspectives on the program’s financial situation – and what can be done
For a deeper look at the policy context, perspectives regarding the recent annual report, and what does – and does not – move the needle on reform, see the following:
The Challenges Facing Social Security | Econofact, Gopi Shah Goda (May 26, 2026).
2026 Social Security Trustees Report, Explained • Bipartisan Policy Center, Sanya Bahal and Emerson Sprick (June 9, 2026).
Social Security’s Shortfall Is Worse than Trustees Project | Cato at Liberty Blog (June 10, 2026)
Moving backwards on Social Security reform | Brookings, Gopi Shah Goda, Sarah A. Binder, and Jason Brown (June 10, 2026).
Understanding the 2026 Social Security Trustees Report | National Academy of Social Insurance (June 11, 2026)
Event Recap: Checking in on the Social Security & Medicare Trust Funds | Committee for a Responsible Federal Budget (June 12, 2026).
Social Security’s Road Ahead: A Discussion of the 2026 Trustees’ Report | American Enterprise Institute - AEI (June 12, 2026)
Social Security’s Financial Outlook: The 2026 Update in Perspective – Center for Retirement Research (June 16, 2026)