Retirement Social Security

Social Security Is Running Out of Money Sooner Than Expected - What Seniors Need to Know

Here's how a reduction in Social Security might impact your retirement plan.

By Chris Lewis, CEPF , Edited by Laura Hohenstein

Updated Oct. 2, 2026

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Social Security benefits are likely a key component of your retirement plan, but the program's future is uncertain. With projections of Social Security insolvency as soon as 2032, benefit cuts are possible, meaning you may need to rethink your retirement planning.

Here's what to know about when Social Security may run out of money, how it might affect you, and the steps you may want to take now to prepare.

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Understanding Social Security insolvency

There's lots of talk of Social Security "running out of money," but that doesn't mean that benefits would stop entirely. Reserve Social Security funds may be depleted, but millions of Americans continue to pay into the program, generating funds. Since money is still coming into the program, it's likely that Social Security recipients are going to continue to receive benefits, but those benefits may be reduced.

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Projections for Social Security depletion

In 2026, the Social Security Board of Trustees released its latest annual report evaluating Social Security's financial status. The report projects that the combined Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) trust funds would become depleted in the third quarter of 2034. That's the same quarter projected in the 2025 report.

Once the combined trust funds are depleted, 83% of scheduled Social Security benefits would still be payable based on projected program income.

The OASI trust fund, which pays retirement and survivor benefits, is projected to become depleted sooner, in the fourth quarter of 2032. At that time, projected income would be enough to pay 78% of scheduled OASI benefits.

Newest projections for Social Security depletion

The latest Trustees Report supersedes the earlier 2025 projections and August 2025 estimate from Social Security Chief Actuary Karen Glenn. Under the 2026 report, OASI reserves are projected to become depleted in the fourth quarter of 2032 — one quarter earlier than projected in the 2025 report. The combined OASI and DI trust funds are projected to become depleted in the third quarter of 2034, unchanged from last year's projection.

The report also shows that Social Security's projected 75-year actuarial deficit has widened. For the combined OASI and DI trust funds, the deficit increased from 3.82% of taxable payroll in the 2025 report to 4.42% in the 2026 report.

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Why Social Security funds are being depleted

Several factors are causing the Social Security depletion timeline to keep moving up. The aging U.S. population has resulted in a surge of retirees, placing an increased financial burden on the workforce to fund Social Security benefits for those retirees with their contributions.

The Social Security Fairness Act, which was enacted in early 2025, issued $17 billion in benefits to beneficiaries whose benefits had been reduced because of the Windfall Elimination Provision or Government Pension Offset, further reducing Social Security funds.

The One Big Beautiful Bill Act created a tax deduction for seniors age 65 and up. Beginning with the 2025 tax year, the Act offered a deduction of up to $6,000 for single filers and $12,000 for married couples, which reduced the income tax revenue that flows back to Social Security funds.

Timing when you claim Social Security

Knowing that Social Security benefits may be reduced if the funds are depleted might impact your decision of when to begin claiming your benefits. While you have the option to claim benefits at age 62, doing so may reduce your monthly benefit by as much as 30% compared to the benefit you could receive at full retirement age. Waiting until full retirement age to claim means you may receive 100% of your benefit amount. And if you wait past your full retirement age, your benefit increases by about 8% per year until age 70.

When you decide to claim depends on factors like your health, income needs, and expected lifespan. Claiming before 2033 or 2034 might help you receive larger benefit payments if those benefits may be reduced when the program's funds become depleted. But there's always the chance that the government may intervene, preventing benefits from being reduced.

Stress-test your retirement plan

If Social Security funds are depleted, your benefits might be cut by about 20%, so now is the time to reevaluate your retirement plan to see if you could navigate such a cut. Calculate what your monthly retirement budget would be pre- and post-Social Security benefit cut. Could you live comfortably on the post-cut amount?

If your post-cut budget is too tight, you might want to explore options like delaying retirement a bit longer, doing some freelance or consulting work in retirement, re-evaluating your investments, or even downsizing your home so you could live more comfortably on a tighter budget.

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Bottom line

The idea of Social Security funds becoming depleted is frightening, but it doesn't mean benefits will end, though they may be reduced. Congress has acted previously, such as when it intervened in 1983 to shore up the Social Security program. There's a lot of conversation around Social Security right now, so watch for Congressional action that might change the picture before funds are depleted.

In the meantime, consult a financial planner and review your retirement plan to ensure you're prepared, especially if you plan on living on just Social Security once you're retired.

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