Social Security may run out of money even sooner than expected, group warns

Social Security and Medicare, pillars of American retirement security, are veering toward insolvency, according to new projections. Combined estimates from the programs’ trustees and independent analysts reveal that both trust funds are on track to run out of reserves by late 2032, just over seven years from now. 

When that happens, federal law mandates automatic benefit cuts to align payouts with incoming revenues, spelling major financial hardship for many retirees.

According to the Committee for a Responsible Federal Budget, the situation has worsened due to recent legislation. The newly enacted One Big Beautiful Bill Act (OBBBA) — which includes tax cuts and a boosted senior standard deduction — has weakened the revenue stream for Social Security by reducing the amount of income subject to taxation. 

As a result, the group contends that benefit cuts at the point of insolvency are projected to be even deeper than those forecast in the latest official trustees report.

Sharp reductions in retirement income are expected

If the trust funds deplete as anticipated, Social Security retirement benefits will be slashed by approximately 24% starting in late 2032, according to the analysis. For a dual-earner couple retiring in early 2033, that translates into an $18,100 annual loss in benefits. 

A typical single-earner couple would lose about $13,600, while low-income dual-earner couples could see cuts of $11,000. The most affected — high-income couples — face reductions nearing $24,000 per year.

Though higher earners would lose more in absolute dollars, the cuts would represent a much larger percentage of income for lower-income couples. All figures are in nominal terms; when adjusted to 2025 dollars, the cuts would be about 15% smaller.

These cuts wouldn’t remain static, however. Because Social Security’s expenditures are outpacing its revenues, the gap will only grow larger. By 2099, benefit reductions could exceed 30%, compounding the crisis for future generations of retirees.

Medicare has its own problems

In addition to Social Security, the Medicare Hospital Insurance trust fund faces similar pressures. Without new funding sources or reforms, payments to healthcare providers will be reduced by 11%, potentially jeopardizing seniors’ access to medical care just as their physical needs increase.

The OBBBA’s immediate effect is a roughly a 1% increase in the required Social Security benefit cuts at insolvency. But the law’s long-term influence could be even more severe. 

If its tax relief measures, like the expanded senior deduction, are extended or made permanent, the shortfall will deepen, leading to steeper automatic cuts unless lawmakers intervene.