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Is Social Security Going Broke?

No, but it does face financial headwinds. Here’s what you need to know about Social Security’s future

7-minute read

Part of Series: Funding and Future

Deirdre Shesgreen,

AARP

Expert reviewed by

Joel Eskovitz

Published October 09, 2026

Deirdre Shesgreen is an AARP writer and editor covering Social Security. She previously worked as a state news editor for the AARP Bulletin and as a reporter and editor at USA Today, the St. Louis Post-Dispatch and other publications.

Joel Eskovitz, JD, is a senior director of Social Security and savings at the AARP Public Policy Institute, where he oversees retirement security and Social Security policy.

Key takeaways

According to the latest projections, the surplus in Social Security’s trust funds will run dry by 2034.
That doesn’t mean Social Security will be out of money, but it would be able to meet only about 83 percent of its payment obligations to beneficiaries.
Lawmakers have numerous options to close the gap, from adjusting payment formulas to raising new revenue.

Trust funds and tax rates may sound like nerdy topics, but they are key to Social Security’s future — and, by extension, to the retirement security of tens of millions of Americans.

In less than eight years, the surplus revenue in the two Social Security trust funds, which helps pay retirement, survivor and disability benefits, will be depleted, according to the 2026 annual report from the Social Security Board of Trustees.

That looming shortfall may be one reason a majority of Americans are worried about whether Social Security will be there for them when they retire. In a June 2025 AARP poll of U.S. adults, 64 percent said they were not very confident or not at all confident about the Social Security system’s future.

AARP and other advocates are pushing Congress to tackle the issue well before the depletion deadline by enacting changes to Social Security’s fiscal structure. Here are the answers to key questions about Social Security’s financing and future.

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Is Social Security going bankrupt or broke?

You might hear a lot of rhetoric to this effect, but the answer is no.

Social Security is primarily funded by a 12.4 percent tax on most workers’ earnings. If you earn wages from a job, you pay 6.2 percent through FICA withholding from your paycheck, and your employer pays the other 6.2 percent. Self-employed people pay the full 12.4 percent as part of their federal tax return.

As long as that revenue keeps coming in — which is to say, as long as Americans keep working — Social Security will have money coming in. It can’t “go broke.”

So why are people worried about it?

For much of its history, Social Security brought in more money from payroll taxes than it paid out in benefits and deposited the extra money into the two trust funds: the Old-Age and Survivors Insurance (OASI) fund, which covers payments for retirees and their family members and survivors, and the Disability Insurance (DI) fund, which is used for disability benefits.

Social Security has two other regular streams of revenue — interest on the trust funds’ investments in federal securities and the income taxes some Social Security recipients pay on their benefits — but payroll taxes account for more than 90 percent of the program’s income.

However, when outlays outstrip revenue, Social Security draws down the surplus to fulfill 100 percent of its payment obligations. That’s been happening since the early 2020s, and it is projected to drain the surplus by 2034, according to the most recent annual report from Social Security’s trustees. Unless Congress steps in, payroll tax revenue will cover only 83 percent of scheduled payments to beneficiaries at that time.

That’s the projection for the two funds combined, but they are distinct pools of revenue, and the OASI fund is in worse shape — its reserve is projected to run out in 2032. (The disability fund, by contrast, is projected to stay solvent for at least 75 years.) In that event, Social Security would bring in only enough revenue to cover about 78 percent of promised retirement benefits.

Congress could reallocate payroll tax revenue from one trust fund to another to address the imbalance, as it has done numerous times (most recently in 2015). But that would only delay depletion of the OASI fund by about two years, from 2032 to 2034.

Will fixing Social Security require drastic steps?

Not necessarily — but the longer Congress waits, the harder the legislative solutions get.

To avert a shortfall, lawmakers will have to increase revenues flowing into the Social Security system; change benefit formulas and rules to reduce payments over the long term; or craft a package that combines both approaches, as they did in 1983, the last time the trust funds neared depletion. (More on that below.)

“This is absolutely something that can be fixed,” says Nancy LeaMond, AARP’s chief advocacy and engagement officer. “Congress has hundreds of tools in its toolbox to strengthen Social Security and fill that gap of 20 percent or so without cutting the payments that Americans have earned for a lifetime of hard work.”

These are some of the most widely discussed options:

Gradually raising the payroll tax rate from 6.2 percent to 7.2 percent for both employers and employees.
Raising the payroll tax cap. In 2026, only the first $184,500 of a worker’s earnings are subject to Social Security taxes (the cap is adjusted annually). Lawmakers have proposed a variety of changes, from lifting the cap entirely to leaving it where it is but also taxing income above a certain amount, such as $250,000 or $400,000.
Using a different measure of consumer prices to potentially reduce Social Security’s annual cost-of-living adjustment (COLA).
Raising the full retirement age, the age at which you can claim 100 percent of the benefit calculated from your lifetime earnings history. The FRA is 67 for people born in 1960 and later; some policymakers have proposed gradually increasing it to 69.

You can find more possible changes — and test out how they would affect the program’s future solvency — through an online tool called the Social Security Challenge, created by the American Academy of Actuaries. The Social Security Administration (SSA) also has an analysis of provisions that would address the shortfall and their respective financial impacts.

Didn’t we already fix Social Security’s finances?

Social Security faced a similar shortfall in the early 1980s. In 1983, lawmakers agreed on a set of amendments that included taxing Social Security income for some recipients, accelerating a planned payroll tax increase and gradually raising the FRA from 65 to 67.

Projections at the time estimated that the 1983 law would keep the program’s trust funds solvent for 75 years. And for nearly 40 years, Social Security’s revenues exceeded its spending on benefits and administration, allowing the trust funds to build up a financial cushion of nearly $3 trillion.

But several demographic and economic factors have reversed that trend. With most of the boomer generation now retired, the number of people collecting Social Security has more than doubled since 1980, from 35.5 million to 71.2 million (as of June 2026). Today’s retirees, especially those at higher income levels, are also living longer than prior generations and thus receiving benefits longer.

At the same time, due to a prolonged period of low birth rates, there are relatively fewer young workers paying the taxes that fund Social Security. Growing income inequality has played a part too — wages above the payroll tax cap have grown much faster than wages under the cap, so less of the country’s collective work income is being taxed to support Social Security.

Is Social Security busting the federal budget?

No, Social Security does not add to federal deficits or the national debt. The system’s revenue and expenditures are separate from the annual federal budget process. Under current law, the SSA cannot borrow money or dip into the U.S. Treasury’s general revenues to cover benefit payments.

In 2025, payroll taxes brought in about $1.3 trillion for the trust funds, accounting for more than 90 percent of Social Security’s revenue, according to the SSA. The funds also brought in $57.8 billion from federal income taxes on benefits and $68.9 billion from interest on investments the trust funds make in federally backed guaranteed securities.

Is Social Security unaffordable?

No. For starters, the payments are modest. As of August 2026, the average retiree benefit was about $2,088 per month, or about $25,000 a year; the average disability benefit was $1,636 (about $19,600 a year).

But that investment generates enormous economic activity in communities across the country. An October 2025 analysis by the National Institute on Retirement Security found that Social Security sparked $2.6 trillion in economic output and supported more than 12 million jobs in 2023.

Finally, Social Security has been hugely successful in meeting its original mission — protecting Americans against poverty in old age. In 1935, some researchers estimate, more than 50 percent of Americans age 65 and over lived in poverty. Today, that figure is about 10 percent, according to the Center on Budget and Policy Priorities, a nonpartisan think tank.

Andy Markowitz and John Waggoner contributed to this story.

The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

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