Highlights of the 2026 Report
Since its inception, Social Security has been the foundation on which America’s retirement security rests. It has demonstrated its strength by paying benefits without interruption in good times and bad, during periods of recession and disaster and during recovery and healing. The program’s durability is demonstrated yet again in this year’s Trustees Report. The 2026 Report provides an important reassurance for working Americans and for seniors that Social Security is not “broke” or “going bankrupt”. Continued revenue from payroll taxes provides a strong foundation for the program’s future. However, the Report also represents a clarion call to Congress that action must be taken soon to provide additional revenue for this critical program as declining fertility rates continue to place stress on the program’s long-term financing.
The 2026 Report shows that Social Security will continue to play a critical role in the lives of the 70 million beneficiaries and the 185 million covered workers and their families who depend on the program now or will depend on it when they retire in the future.
Here are some of the highlights:
- Social Security’s health remains sound in the short term. The combined Old Age, Survivors and Disability programs is projected to be able to pay full benefits until 2034 — the same as in last year’s Report. Thereafter, there will still be enough income coming into the program to pay about 83 percent of all benefits owed, declining to 65 percent in 2100. When considered separately, the Old Age and Survivors Insurance (OASI) Fund is projected to be depleted in 2032, at which point 78 percent of benefits owed will be payable, declining to 62 percent in 2100. The separate Disability Insurance (DI) Fund is projected to pay full benefits for the next 75 years.
- Social Security remains adequately funded for now. The Trustees estimate that, in 2026, Social Security’s total income, along with the assets in the Trust Funds, will be more than sufficient to pay full scheduled benefits.
- According to the Trustees, the combined OASDI program is around 87 percent funded for the next 25 years, around 80 percent funded for the next 50 years, and 76 percent funded over the next 75 years.
- The Trustees Report that there was about $2.561 trillion in the Social Security Trust Funds at the end of 2025 and that these reserves will continue to contribute to the funding of the program, yielding interest income of about $69 billion in 2025.
- The total cost of the Social Security program in 2025 was $1.609 trillion, mostly for benefit payments. Total income was $1.449 trillion, which consisted of $1.381 trillion in non-interest income and $69 billion in interest earnings.
Background
The Social Security Act established a Board of Trustees to oversee the Old-Age, Survivors and Disability Insurance Trust Funds (OASDI), popularly known as the Social Security Trust Funds. Legally, the Old-Age and Survivors Insurance (OASI) Fund and the Disability Insurance (DI) Fund are separate entities and their funds are managed separately. However, in previous years when the Disability Insurance fund was approaching depletion, Congress passed legislation allowing intra-fund borrowing or diverting additional payroll taxes from the OASI Fund to temporarily cover the shortfall. For this reason, the National Committee traditionally considers the financial status of both Funds together. Each year the Trustees issue a Report on the financial status of the Trust Funds, both as a combined OASDI unit and separately. The Report is a snapshot of the projected health of the Funds over the upcoming 75 years (ending 2100). The 2026 Report is the 86th Report that has been prepared by the Trustees since the beginning of the program. With the help of the Social Security Administration’s actuaries, the Trustees estimate the income and expenditures of the Funds, considering projections of both demographic and economic factors.
The Social Security Trust Funds are in long-range balance when the income to the Funds exceeds expenditures over the upcoming 75-year valuation period. When income does not meet expenditures in the long run, there is a shortfall, or deficit. Income, expenditures and balances are usually expressed as a “percent of payroll,” meaning the percent of all wages and self-employment that is projected to be earned by Americans over the 75-year valuation period. The 2026 Report projects that the combined OASDI Trust Funds have an actuarial deficit equal to 4.42 percent of taxable payroll, a significant increase from the 3.82 percent shortfall projected in last year’s Report.
The persistence of an actuarial deficit is a reminder that the Social Security program’s financial health still needs to be strengthened. Despite the crisis rhetoric used by some, including many in the media, the National Committee believes that Congress can improve the long-term outlook for Social Security with modest and manageable changes in revenue without enacting harmful cuts for current or future retirees. Polling has consistently shown that Americans of all political persuasions value Social Security, want to improve benefits and are willing to pay higher taxes to preserve the program.
That is why the National Committee enthusiastically endorses legislation that extends the financial footing of Social Security by bringing new revenues into the program. Bills such as those introduced by Representative John Larson (D-CT), Senator Richard Blumenthal (D-CT), Senator Bernie Sanders (I-VT), Representative Val Hoyle (D-OR), Representative Brendan Boyle (D-PA), and Senator Sheldon Whitehouse (D-RI) show how Social Security’s future can be preserved for both current and future retirees. All of these bills ask the wealthy to pay their fair share to strengthen Social Security, something supported by overwhelming majorities of the American people. This legislation also calls for significant improvements in the benefits provided by Social Security.
Sources of Funding for Social Security
Social Security is financed mainly through payroll taxes on wages and self-employment income. Employees and employers each make contributions equal to 6.2 percent of earnings, up to a cap of $184,500 in 2026, up from $176,100 in 2025. Of the total, 5.3 percent goes into the OASI Fund and 0.9 percent into the DI Fund. These funds are used to pay Social Security benefits. The payroll tax cap increases with the growth in the nationwide average wage. In 1983, the wage cap was set at an amount that would tax about 90 percent of all wage income in the United States. But because wages above the cap have grown much faster than average, earnings under the cap now comprise about 83 percent of aggregate wages.[1]
The self-employed contribute the equivalent of the combined employer and employee tax rates, which totals 12.4 percent. They are then allowed to deduct the equivalent of the employer’s share from their income taxes.
Social Security is almost exclusively funded by the payroll tax contributions mentioned above (91.3 percent of OASDI income), income taxes on Social Security benefits paid by retirees with higher incomes (4 percent of OASDI income), and interest from the Treasury bonds held in the Trust Funds (4.8 percent of Trust Fund income).
The Social Security Trust Funds
When working Americans pay their Social Security payroll taxes to the U.S. Treasury, those taxes are credited to the Social Security Trust Funds. When income to the Trust Funds in a year has exceeded the amount of benefits that the program is obligated to pay, then the Social Security Trust Funds hold these funds until they are needed to pay benefits. The surplus income is used to purchase special issue U.S. government bonds that are backed by the full faith and credit of the United States and which earn a rate of return similar to that earned by other long-term U.S. securities. These bonds comprise the assets of the Trust Funds. They earn interest and further increase the balance of the Funds. These accumulated assets are commonly referred to as the Social Security “surplus” or “reserves”, and they remain available, when needed, to help pay benefits to current retirees. Social Security has been drawing down these reserves since 2021, with the reserves reduced by $160 billion in 2025 to help pay benefits.
The cost of administering the Social Security program is modest. The net administrative expenses of the combined OASDI Trust Funds in 2025 totaled $7 billion, equal to 0.4 percent of the total cost and 0.5 percent of total income of both programs.
At the end of 2025, about 70 million people were receiving benefits: 56 million were retired workers and their dependents; 6 million were the survivors of deceased workers; and about 8 million were disabled workers and their dependents. About 185 million workers had earnings covered by Social Security and paid payroll taxes in 2025.
The Importance of the Trust Funds
Although some dismiss the importance of the Social Security Trust Funds and discount the interest income produced by their assets, the Trust Funds are an essential element of the program’s funding. And it is important to emphasize that the Trust Funds did not accumulate the substantial portfolio of assets they now hold by accident.
Throughout most of the early history of Social Security, the Trust Funds played only a limited role in the funding of the program. That is because for many years the balances they held were relatively small and were used only as a contingency reserve to tide the program over in years when revenue temporarily fell below the level needed to pay benefits.
The Social Security Amendments of 1983 expanded the role of the Trust Funds. At that time Congress made the decision, in essence, to partially advance-fund the retirement of the baby boomers by accumulating a very substantial balance in the Trust Funds. As the present balance of over $2.56 trillion testifies, Congress was successful in achieving this goal. In fact, baby boomers were the first generation to both pay for existing beneficiaries’ benefits and partially pre-fund the benefits they themselves earned.
Some, however, question whether this plan to partly pre-fund benefits will work. There are economists who argue that the balances in the Trust Fund, and the interest they earn, are not economically meaningful. Others question how the bonds would be redeemed when the money is needed to pay benefits. Still others argue that the program must be cut to make sure that the Trust Funds’ assets never have to be drawn down.
We believe the important point to remember about the Trust Funds is that they hold bonds that were purchased with money that was paid into the program by millions of Americans. Those who made these contributions are aware of the amounts that were deducted from their paychecks, and they expect the U.S. government will redeem these bonds when they are needed to pay benefits, just like any other debt obligation it has.
And they have the law on their side in that regard. Section 201(d) of the Social Security Act says that “Each obligation issued for purchase by the Trust Funds shall be evidenced by a bond, note, or certificate of indebtedness setting forth the principal amount, date of maturity, and interest rate of the obligation and stating on its face that the obligation shall be supported by the full faith and credit of the United States, and that the United States is pledged to the payment of the obligation with respect to both principal and interest.”
Clearly, it is important that action be taken soon to strengthen the financial soundness of the Social Security program so that it remains available to all Americans and can pay all benefits that are owed, both now and in the future. There are many different options for strengthening this vital program, and developing a consensus remains a challenge that must be met by the nation’s leaders. Although the decisions made in 1983 to build up a significant balance in the Trust Funds is helping finance the retirement of the baby boom generation, as was intended, we are running short of time to develop a consensus on how to safeguard this critical program for today’s beneficiaries and for future generations.
Social Security’s Long-Range Outlook
The 2026 Trustees Report projects that, if Congress passes legislation allowing the OASI and DI Funds to share resources, the combined Social Security Trust Funds will be able to pay full benefits until the third quarter of 2034, the same quarter as projected last year. After 2034, Social Security will have annual revenue sufficient to pay about 83 percent of benefits, declining to 65 percent in 2100. If considered separately, the OASI Fund is projected to be depleted in the fourth quarter of 2032, one quarter earlier than projected in last year’s Report, when 78 percent of benefits owed will be payable, declining to 62 percent in 2100. The DI Fund reserves are projected to remain positive throughout the next 75 years.
The actuarial deficit of the Social Security program, measured as a percent of taxable payroll over the 75-year valuation period, is projected to be 4.42 percent, significantly worse than the 3.82 percent deficit projected in the 2025 Report. This 0.6 percent jump is the largest change since 1994. The change to the ultimate fertility rate assumption is the largest contributor to the significantly increased deficit.
The annual cost of the program is estimated at 5.3 percent of Gross Domestic Product (GDP) in 2026, increasing to about 6.9 percent of GDP by 2084 and declining to 6.7 percent of GDP by 2100. The 75-year actuarial deficit equals about 1.5 percent of GDP through 2100, slightly higher than the 1.3 percent of GDP estimated last year.
Four key factors affected the projections for the 2026 Report: (1) The Trustees significantly reduced their projections for the total fertility rate in the United States, from 1.90 children per woman to 1.75 children per woman. This reduction reflects family size patterns that have been observed over the years in the United States. It decreases the actuarial balance by 0.33 percent of taxable payroll. (2) Reflecting the policies of the Trump Administration, the Trustees significantly reduced their estimates of immigration into the United States, both lawful and unlawful, from 1.35 million to 1.20 million, with a gradually increasing transition path between 2025 and 2035. This period of increasing immigration reflects the Trustees’ belief that current immigration policies will moderate over time. This downward immigration estimate is responsible for a reduction of 0.12 percent of taxable payroll. (3) The Trustees incorporated the harmful effects of the One Big Beautiful Bill Act (OBBBA), promoted by President Trump and enacted on July 4, 2025. As a result of this bill, less income tax will be paid on Social Security benefits, providing both Trust Funds with lower levels of revenue in the future from income taxation of Social Security benefits, and is responsible for an additional reduction in the actuarial balance of 0.16 percent of taxable payroll. (4) Offsetting some of the negative effects of the prior three assumptions, the Trustees projected that labor productivity and average real earnings will grow faster in this year’s Report than in last years, for an increase of 0.10 percent of taxable payroll.
The ratio of covered workers per beneficiary has been stable, remaining between 3.2 and 3.4 workers per beneficiary from 1974 through 2008. It has generally declined since then, initially due to the economic recession of 2007-2009 and the beginning of a notable demographic shift. This shift causes the ratio of workers to beneficiaries to decline as workers of lower-birth-rate generations replace workers of the baby boom generation, who themselves had lower fertility rates than their parents. In 2025, there were about 2.6 workers for every OASDI beneficiary. The underlying demographic shift is projected to continue to lower this ratio over the next 60 years, to about 1.9 workers per beneficiary by 2075.
In an effort to quantify the size of the solvency gap, and to emphasize the need for Congress to act expeditiously, the Trustees estimate that if changes had been made effective in January 2026, the combined OASDI program would be solvent for the entire 75-year period ending in 2100 if legislation was enacted that would:
- Increase the payroll tax rate from 12.4 percent to 16.65 percent
- Reduce scheduled benefits by 25.2 percent for all current and future beneficiaries
- 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 Congress delays enacting legislation until the OASDI reserves in the Trust Funds are completely depleted, the Trustees project the following changes would need to be made:
- Increase the payroll tax rate from 12.4 percent to 17.3 percent starting in 2034
- 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.
Note, however, that these projections only assume revenue increases through increasing the rate of the payroll tax. The Trustees do not provide estimates of increased solvency through increased revenues by raising the payroll tax cap, or by applying the Social Security tax to investment income, similar to the Net Investment Income Tax (NIIT) that currently applies to Medicare contributions. Social Security’s actuaries have estimated the impact of such changes as part of their evaluation of specific pieces of legislation, such as those endorsed by the National Committee and referenced elsewhere in this analysis, but those estimates do not appear in the annual Trustees Report.
Projection of Upcoming Cost-of-Living Adjustment (COLA)
The 2026 Trustees Report projects a 2.7 percent cost-of-living adjustment (COLA) for next year. If this proves accurate, it will represent a lower COLA than seniors received in 2025. With the exception of pandemic-driven COLAs of 8.7 percent in 2023 and 5.9 percent in 2022, the current COLA formula has only led to an increase of over 3 percent three times since 2008. There was no COLA at all in 2009, 2010 or 2015, and the 2016 COLA was a mere 0.3 percent. The National Committee believes that the estimating methodology used by the Bureau of Labor Statistics does not fully reflect the effect of inflation on today’s seniors. We further believe that Social Security’s COLA needs to be strengthened.
Under current law, a Social Security beneficiary receives an increase in his or her Social Security check each year based on the previous year’s increase in the cost of living. This COLA is intended to offset the individual’s additional expenses resulting from inflation. The Social Security COLA is based on the Bureau of Labor Statistics’ measurement of the increase of the cost of a market basket of goods and services for urban wage earners and clerical workers from the third quarter of one year to the third quarter of the next year. The size of the COLA is announced by the Social Security Administration, usually in October, and beneficiaries see the change in their January Social Security payment.
Unlike the urban wage earners and clerical workers upon whom the Consumer Price Index is based, seniors spend a significant portion of their income on out-of-pocket health care expenses not covered by Medicare. Health care costs typically rise faster than costs in the overall economy. As time goes by, more and more of their Social Security benefits will be eaten up by rising health care costs. According to the Medicare Trustees, 41 percent of the average senior’s Social Security benefit will be consumed by Medicare out-of-pocket costs in 2100, compared with 27 percent in 2026.
Seniors cannot afford to have their COLA calculated using an index that does not accurately gauge the spending patterns that are unique to them. That is why the National Committee supports legislation that would base the Social Security COLA on a fully-developed consumer price index for the elderly, or CPI-E, that better reflects the purchasing patterns of seniors. This kind of specialized index should be used to make sure that seniors’ buying power does not erode over time. We are pleased to note that a number of bills introduced by members of Congress, including those sponsored by both Representatives Larson, Hoyle, and Senators Sanders and Blumenthal, which we mentioned earlier, require use of the CPI-E in determining COLAs for Social Security.
Conclusion
Our nation needs Social Security more than ever. These modest benefits have become the last remaining pillar of economic security for millions of Americans. Personal savings have been difficult to accumulate because wages have remained stagnant for decades. More than half of all workers have no retirement plans at work and millions more have little or no retirement savings. While Social Security has lifted generations of seniors out of poverty, benefits must be improved to protect the growing share of seniors who depend on the program for all or most of their retirement income.
Social Security is strong. It provides a steady and reliable source of income for the more than 70 million individuals who receive benefits from the program. It also generates $2.6 trillion in total economic output and $1.6 trillion in GDP as seniors spend their benefit for essential goods and services in their communities.[2] Now is the time to strengthen a program that remains central to the economic well-being of all Americans — those who are retired today and those who one day hope to be retired.
Government Relations and Policy, June 2026
[1] Social Security Administration, Annual Statistical Supplement, 2025 https://www.ssa.gov/policy/docs/statcomps/supplement/2025/4b.html#table4.b1
[2] “New Research Finds Social Security Has a Strong Economic Impact”, National Institute on Retirement Security, October 30, 2025, https://www.nirsonline.org/articles/new-research-economic-impact-social-security/