Social Security’s retirement trust fund faces funding shortfall one year earlier than expected

Social Security’s retirement trust fund will run out of reserves in 2032, one year earlier than last year’s projection, according to an annual report released Tuesday by the program’s trustees. The shift reflects rising healthcare costs and increased government spending, pushing the depletion date to within less than a decade. While the system won’t collapse, benefits would be cut to about 77% of scheduled payments after the trust fund is exhausted. Medicare’s hospital insurance trust fund remains on track to deplete in 2033, unchanged from last year’s estimate. The combined Social Security trust funds—covering old-age and disability benefits—will also be unable to pay full benefits starting in 2034, with revenue covering only about 83% of scheduled payments afterward. The trustees, including Treasury Secretary Janet Yellen, Labor Secretary Julie Su, Health and Human Services Secretary Xavier Becerra, and Social Security Commissioner Frank Bisignano, warned that urgent reforms are needed. Bisignano stated the Trump administration is committed to protecting Social Security by addressing waste, fraud, and abuse. However, past attempts at reform have stalled due to political resistance, with lawmakers repeatedly deferring action. About 70.1 million Americans rely on Medicare, while Social Security benefits were last reformed in 1983 by raising the eligibility age from 65 to 67. Medicare’s eligibility age remains at 65. AARP’s CEO, Myechia Minter-Jordan, urged Congress to act, calling the projections a ‘wake-up call’ and emphasizing that retirees deserve full benefits after decades of contributions.