Social Security Could Still Pay 83% of Scheduled Benefits in 2034 if Combined Reserves Run Out, Trustees Say

Social Security's combined trust funds are projected to run out in 2034, after which continuing income would cover 83% of scheduled benefits, according to the 2026 Trustees Report. Without legislative action, payments would be lower than the amounts scheduled under current law.

The Social Security Administration's report projects that the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) trust funds will be depleted in the third quarter of 2034.

An analysis by the AARP Public Policy Institute suggests the outlook could have been different if taxable payroll had kept pace with the growth of the US economy. Researchers estimate that, under that scenario, Social Security could have continued paying full benefits until 2059, 25 years beyond the projected depletion date.

The Forces Behind Social Security's Funding Shortfall

America's ageing population is not the only factor putting pressure on the programme. Researchers have also pointed to changes in how income is earned across the economy.

The share of US gross domestic product (GDP) subject to Social Security payroll taxes fell from about 41% in 1983 to 34% in 2025, according to the AARP analysis.

Richard Johnson, vice president of financial security at the AARP Public Policy Institute, said the programme's revenue system had not kept pace with changes in the economy.

The research also highlighted rising income inequality, automation and business structures that allow some earnings to be classified as profits rather than wages. These developments have reduced the proportion of national income subject to Social Security payroll taxes.

The Benefit Outlook Through 2034

The Old-Age and Survivors Insurance (OASI) Trust Fund is expected to run out of reserves in the fourth quarter of 2032. At that point, continuing income would cover about 78% of scheduled retirement and survivors benefits.

The separate Disability Insurance (DI) Trust Fund is projected to remain solvent throughout the 75-year forecast period.

The OASI and DI funds remain legally separate, but the trustees also calculate their combined financial outlook for analytical purposes. The AARP used this combined projection for its 2034 estimate.

Researchers estimated that Social Security would have collected an additional $10.8 trillion (£8.16 trillion) between 1984 and 2034 if taxable payroll had remained at 41% of GDP. The estimate is expressed in inflation-adjusted 2025 dollars.

Meanwhile, the worker-to-beneficiary ratio is projected to fall from 3.4 in 2000 to 2.4 by 2030, adding pressure to the programme.

Lawmakers' Options for Addressing the Shortfall

The AARP analysis suggests that increasing contributions from higher-income earners could help strengthen Social Security's finances.

One proposal is to raise the taxable earnings cap, so a larger share of high earners' wages is subject to payroll taxes. Other suggestions include eliminating the cap or extending Social Security taxes to certain business and investment income.

According to AARP research based on Social Security Administration assessments, eliminating the taxable earnings cap could close about 67% of the programme's 75-year funding gap, provided workers did not receive corresponding benefit increases for their additional contributions.

Johnson argued that rebuilding Social Security's revenue would be preferable to cutting benefits Americans have already earned.

The organisation has also raised concerns about earlier reforms. Changes introduced in 1983 included gradually increasing the full retirement age from 65 to 67, delaying cost-of-living adjustments by six months and introducing taxes on some Social Security benefits.

Jenn Jones, AARP's vice president of financial security and livable communities, said those reforms had reduced lifetime retirement benefits by about 19% for people turning 65 in 2026 compared with the previous rules. She warned that millions of Americans could not afford to lose even a penny from their monthly payments.

The projected 2034 depletion date does not mean Social Security payments will stop. Continuing income is expected to cover about 83% of scheduled benefits, though the eventual impact will depend on economic conditions and whether Congress acts.