This is a lengthy post, but press on if you are interested in the facts about the status of Social Security.
Every word here except those in red are directly from the text of the latest Trustee Report.
Size of the Solvency Gap
A program is considered solvent if it can pay scheduled benefits when due with scheduled financing. The OASDI program will not be solvent once its reserves become depleted in 2034.
To illustrate the magnitude of the solvency gap, if the following changes were made in 2026, then the combined OASDI program would be solvent for the full 75-year period ending in 2100:
• Increase the payroll tax rate from 12.40 percent to 16.65 percent starting in January 2026, or
• Reduce scheduled benefits by 25.2 percent for all current and future beneficiaries starting in January 2026, or
• Reduce scheduled benefits by 30.3 percent for only those who become eligible for benefits in 2026 and later, but not for current beneficiaries, or
• Other equivalent combinations of increased revenue and/or reduced benefits.
If substantial actions are deferred until the OASDI program reaches reserve depletion, significantly larger changes would be concentrated on fewer years and fewer generations.
For example, if the following changes were made in 2034, then 75-year solvency through 2100 would be achieved:
• Increase the payroll tax rate from 12.40 percent to 17.30 percent starting in 2034, or
• Reduce scheduled benefits for all current and future beneficiaries by 28.5 percent starting in 2034, or
• Other equivalent combinations of increased revenue and/or reduced benefits.
If legislative solutions focus only on achieving 75-year solvency without considering year-by-year financing, then a large financial imbalance could remain for 2100 and beyond.
Sustainable solvency is achieved when the projected trust fund ratios are positive throughout the 75-year projection period and are either stable or rising at the end of the period. Making changes now that achieve sustainable solvency could avoid the need for later legislative changes.
Conclusion
The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way to phase in necessary changes gradually and give workers and beneficiaries time to adjust. Implementing changes sooner rather than later would allow more generations to share in the needed revenue increases or reductions in scheduled benefits.
In 2026, Social Security will play a critical role in the lives of 71 million beneficiaries and 185 million covered workers and their families. With informed discussion, creative thinking, and timely legislative action, Social Security will continue to protect future generations.
Remember, the Trustees responsible for this report and signing it include the current Secretary of the Treasury, the Secretary of Health and Human Services and Secretary of Labor
The following assessments and assumptions also contained in the report are very important (and keep in mind who signed the report).
Notable Changes Since Last Year’s Report
Since last year’s report, the Trustees have reassessed their expectations and have made changes to the intermediate assumptions in three primary areas.
Fertility: The ultimate total fertility rate is 1.75 children per woman for this report. This rate is lower than the rate of 1.90 children per woman used in last year’s report.
• Immigration: (1) The assumed levels of temporary or unlawfully present immigrants entering the country in 2022-25 were lowered; (2) the assumed ultimate level of temporary or unlawfully present immigrant entrants for years 2035 and later was lowered from 1.35 million to 1.20 million, with a gradually increasing transition path between 2025 and 2035; and (3) the rates of emigration from the unlawfully present population in years 2025-30 were increased.
• Near-term economics: Real GDP per hour worked (labor productivity) and average real earnings are assumed to grow faster in this year’s report. In particular, the average annual growth in real GDP per hour worked from 2025 to 2035 is 0.05 percentage points higher than in last year’s report, and the average annual growth in average real earnings from 2025 to 2035 is 0.28 percentage points higher than in last year’s report.
In addition, one law was enacted that is projected to have a substantial effect on Social Security’s financial status.
• One Big Beautiful Bill Act (OBBBA): Enacted on July 4, 2025, this law makes permanent the lower income tax rates and adjusted tax brackets originally enacted under the 2017 Tax Cuts and Jobs Act and both increases and makes permanent the larger standard deduction of the 2017 Act. The OBBBA also adds a temporary additional standard deduction for taxpayers over age 65. As a result, less income tax will be paid on Social Security benefits, and the OASI and DI Trust Funds will receive lower levels of revenue in the future from income taxation of Social Security benefits.
The fertility, immigration, and OBBBA changes have a negative projected effect on Social Security’s financial status, while the near-term economic changes have a positive effect.
Section IV.B.6 of this report includes a detailed explanation of the long-range financial effects of the changes since last year’s report, by category.
Only the assumption of future greater economic growth prevents the solvency status from being worse than it is. And note, lower immigration assumptions legal or otherwise have a negative impact because illegal immigrants pay social security taxes, but do not collect benefits.
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