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Social Security retirement benefits could face an automatic, across-the-board reduction in just six years.
Without action before then, the Social Security Retirement Trust Fund, formerly known as the Old Age and Survivors Insurance Trust Fund, which helps provide benefits to eligible workers and their eligible family members, will run out in the fourth quarter of 2032, program administrators said in a June report.
At that time, administrators anticipate retirement benefits will be reduced by 22%.
The Congressional Budget Office has a gloomier forecast, predicting that the pension trust fund could run out sooner, in mid-2032, and that retirees could see their benefits cut further, to 26%, in the event of insolvency.
Recipients could see their monthly benefits reduced by an average of $500 in the United States, based on a 24% benefit reduction, according to a June report from the Committee for a Responsible Federal Budget. In 29 states, retirees would see even larger average cuts, according to the nonpartisan organization focused on educating the public on budget policy issues.
Senators elected in November will be in office in 2032, when the retirement trust fund exhaustion date arrives. Their ability to right the ship is crucial for retirees and the economy. But it’s not safe given the political climate inside the ring road.
“The focus on 2032 is appropriate in the sense that that is when beneficiaries and future beneficiaries will see and feel the consequences of inaction,” said Shai Akabas, vice president for economic policy at the Bipartisan Policy Center, a public policy think tank focused on promoting bipartisan cooperation.
“There’s nothing that requires Congress to act like this type of deadline,” he said.
Of course, brinkmanship and political gridlock can hamper efforts. Congress could choose to dismiss the issue later, rather than enact changes to strengthen Social Security — which could require tax increases, benefit cuts, or a combination of both.
If lawmakers decide to combine the Social Security retirement and disability trust funds, the exhaustion date could be moved to the third quarter of 2034, when benefits could be reduced by 17 percent, according to Social Security administrators.
Akabas said any delay by lawmakers would have consequences: The Social Security deficit would continue to grow.
It could also have consequences for the economy, he added.
In 2023, Social Security benefits generated $2.6 trillion in total economic output and supported more than 12 million jobs, according to a 2025 study by the National Institute on Retirement Security, a nonpartisan, nonprofit organization based in Washington, DC.
A 19% benefit cut could reduce gross domestic product by hundreds of billions of dollars, according to a NIRS study.
Additionally, failure to reform Social Security would lead to stress in the bond market, according to a study released in June by the Mercatus Center at George Mason University.
Social Security is tied to the bond market because its trust funds are invested in special U.S. Treasury bonds.
If Social Security reform is delayed, it could put upward pressure on Treasury yields as investors want higher yields on long-term bonds.
According to the Mercatus Center study, a delay in reform could either lead to higher interest rates and borrowing costs or inflationary adjustments that would hurt the value of public debts. According to the study, these changes could affect household budgets due to higher borrowing costs for mortgages, auto loans and other types of consumer credit, as well as student loans.
If interest rates and prices rise, it will interfere with economic growth, Akabas said.
“These effects are also being felt by the American people, in addition to the adjustments to their benefits,” Akabas said.
As the midterm elections approach, some Democratic congressional candidates have said they would raise or eliminate the Social Security payroll tax cap so that high earners would contribute more to the program. In 2026, the 6.2% tax paid by workers and their employers applies to earnings up to $184,500.
It remains to be seen, however, whether leaders in Washington will have the political will to tackle the problem anytime soon. Tax increases, in particular, may not be considered politically popular as the 2028 presidential election approaches.
As such, it is “extremely unlikely” that payroll taxes will increase in the next two years, said Jessica Riedl, a researcher at the Urban-Brookings Tax Policy Center, which provides independent analysis on tax issues. If those tax hikes come to fruition, it will likely be closer to 2032, she said.
“In Washington, they love to wait until the last minute,” Riedl said. “There’s no interest on either side for this kind of tax increase in the short term. In the long term, I think everything is on the table.”
The National Committee to Preserve Social Security and Medicare, founded by President Franklin Delano Roosevelt’s son, former Congressman James Roosevelt, has evaluated outgoing lawmakers on whether their votes have protected those programs.
The advocacy organization has also supported candidates who favor raising payroll taxes and protecting Social Security benefits from cuts. With these endorsements, NCPSSM gives candidates a set of boxing gloves as a symbol of the battles they will face in Congress, according to Dan Adcock, NCPSSM director of government relations and policy.
The organization is also working to educate voters that senators elected this year will be among those addressing Social Security, he said.
“We tried to make voters understand why this is an issue that should be at the forefront,” Adcock said. “They need to ask applicants what their plans for the program would be.”
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