The annual Trustees Report released on June 9 projects that the Social Security program will be insolvent by the third quarter of 2032. Absent Congressional action, beneficiaries would sustain a 22 percent benefits cut, the report says.

The Trustees report pointed to the U.S.’s declining birth rate, the immigration crackdown, and the new tax law as factors that have worsened the outlook for the Social Security program’s solvency. The biggest underlying factor is the aging Baby Boomer population which is drawing benefits in greater numbers than previous generations (and future generations, too) combined with fewer people in the workforce paying payroll taxes into the Social Security trust funds. The 2032 date by which the forecast projects insolvency is three months earlier than the date projected last year.

The Trustees Report also forecast a slightly earlier insolvency date for the Medicare hospital trust fund. It is projected to be depleted by the second quarter of 2033.

Prospects: Some in Congress have been concerned about Social Security and Medicare solvency for years. Proposals to address the problem include imposing more tax liability on wealthier workers, raising or even eliminating the wage base, reducing benefits, or some combination of all of these measures. All are politically fraught, and so far Congress—despite warnings of a looming crisis—has chosen to avoid the political danger of changes to Social Security while the crisis is still years into the future. However, Speaker of the House Rep. Mike Johnson (R-LA) has said the GOP House will address the problem “soon.”

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org