Retirement Social Security

Social Security Could Lose Billions Sooner Than Expected - What That Means for You

A look into how Social Security is funded and how it impacts your benefit.

By Lee Huffman

Edited by Andrea Basse

Updated Jan. 9, 2026

If you're already collecting Social Security or are planning to retire soon, recent headlines about the Social Security "losing billions" may feel unsettling. Many retirees worry that they'll suddenly stop receiving benefits or that benefits they've counted on for retirement planning won't be there when they need them the most.

The most important thing to know is that Social Security is not going away. However, Social Security trust funds may be depleted sooner than previously expected if Congress doesn't act.

While benefits will not vanish, especially for today's retirees, they will change for everyone currently receiving them or who expects to in retirement. Here's what you need to know about the Social Security trust fund and how it affects your retirement income.

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How Social Security is funded

Social Security is funded mainly through payroll taxes paid by workers and employers. Employees and employers each pay 6.20% of eligible wages, up to $184,500 in 2026, into the system. If you're self-employed, you pay both portions of these taxes, which adds up to 12.40%.

These taxes flow into the system every paycheck, unless your income exceeds the maximum taxable earnings. If you make more than the limit, you stop paying Social Security taxes on income above that amount.

When payroll taxes collected don't fully cover the benefits paid out, the difference is paid from the Old-Age and Survivors Insurance (OASI) Trust Fund. This structure is why Social Security can keep paying benefits even as demographics shift.

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What the latest projections actually say

As benefits paid out exceed Social Security taxes collected, withdrawals from the trust fund continue to lower its balance. At some point, the trust fund runs out and "depletes" the account. According to the most recent Social Security Trustees Report, the OASI trust fund is projected to be depleted in the mid-2030s. This is a bit earlier than prior estimates.

"Depleted" does not mean Social Security checks will stop or that the program will collapse. It means the trust fund reserve would be used up, and benefits would then be paid solely from payroll taxes collected.

Under current law, it's estimated that taxes collected will cover roughly 75 to 80% of scheduled benefits paid out. If you're receiving the 2026 average Social Security benefit of $2,071 and the trust fund ran out this year, you'd receive about $1,500 to $1,600 per month.

Why the timeline shifted

The projected date moved earlier mainly because of long-term trends, not a sudden failure of the Social Security program:

More retirees are collecting benefits as the population ages
Fewer workers per retiree are paying into the system
Higher benefits due to inflation adjustments above average (8.7% increase in 2023)
Updated economic assumptions about wages and growth

These factors have been building for years. The updated timeline reflects better data, not an emergency.

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What this means if you're collecting Social Security

One of the biggest concerns among retirees is that Social Security is going away. While workers can save more or delay retirement, people who have already retired don't have as many options.

There is no scenario under current law where Social Security benefits suddenly stop for people already receiving them. Even if the trust fund were depleted, benefits would continue to be paid every month. However, the benefits would be reduced since the amount collected doesn't support the current level of payouts.

Could benefits be reduced in the future if Congress does nothing? Yes. But those reductions would be gradual, proportional, and years away, not sudden or retroactive.

Historically, lawmakers have been far more protective of current retirees than future beneficiaries because retirees tend to vote in higher numbers than any other age group.

What this means if you're close to retiring

If you're within five to 10 years of retirement, the concern usually sounds like this: "Will Social Security still be there when I file?"

The answer is yes. Payroll taxes will continue to fund the program, and benefits will continue to be paid. The real question is not whether Social Security exists, but how much its benefits will change over time.

This is why flexibility matters:

Claiming strategies
Coordinating spousal benefits
Integrating Social Security with other income sources

These planning decisions can help reduce reliance on any single assumption about future benefits.

Why Congress is under pressure

By law, Social Security can only pay benefits from available revenue. That creates pressure on Congress to act before automatic reductions take effect. Lawmakers have many options, including:

Gradual tax increases
Adjustments to the wage cap
Modest benefit formula changes
Phased-in reforms over many years

Social Security has been reformed before, and changes were phased in slowly to protect retirees. If Congress decides to act now, there's a strong likelihood that it'll keep current retirees whole and shift the burden onto future generations, who have more time to adjust their retirement savings strategies.

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Bottom line

Headlines about Social Security "losing billions" can sound frightening, but they often leave out critical context. The system continues to collect revenue, pay benefits, and serve as a foundational income source for millions of retirees.

For those already collecting, there is no immediate threat. For those close to retiring, Social Security will still be part of your income plan.

Understanding how the system works allows you to focus on smart retirement planning and to follow the policy debate with clarity rather than fear.

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