By Leada Gore
al.com
(TNS)
Looming cuts to Social Security could be deeper than previously predicted, according to a new federal report.
Earlier projections predicted Social Security would be unable to pay full benefits by late 2032. At that point, experts said benefits would be reduced by as much as 24%, or roughly $500 a month.
This week, however, the Congressional Budget Office issued a new prediction that the cuts would likely be 26%, rising to 40% by the end of the century. A 26% cut would equal an average of $542 a month.
Reserves for the Old-Age and Survivors Insurance Trust Fund are set to run out in the fourth quarter of 2032. The bulk of the money for Social Security is funded through dedicated payroll taxes and taxes on benefits and any shortfall is covered by its existing trust funds. For the past 16 years, Social Security has paid out more than it has taken in, forcing it to dip into trust fund reserves to cover benefits.
By law, Social Security can’t pay out more in benefits than it receives in revenue, so once the trust fund is gone, cuts will follow.
Cost vs. revenues
The issue comes down to cost vs. revenue.
According to the Committee for a Responsible Federal Budget, Social Security’s costs have grown from 10.7% of taxable payroll in 1990 to 13.5% in 2010 and 15% today. These costs are expected to grow to 16.5% of payroll by 2032 and to 21% by the end of the century. Meanwhile, revenues are failing to keep up, growing to only 12.7% of payroll in 1990 to 12.9% today, and growing slowly toward 14% of payroll by some point in the 2100s, the committee said.
Recommended Articles
Benefits September 24, 2026
When Should You Claim Social Security? There’s No One Right Age
Benefits September 24, 2026
Social Security Identity Theft Bill Passes Congress, Heads to Trump
Payroll September 21, 2026
Social Security is Phasing Out Paper Checks
“Trust fund solutions are urgently needed to save Social Security and to protect retirees from a benefit cut that CBO projects will be as high as 26%,” CRFB said in a statement. “The release of CBO’s 2026 Social Security projections is a timely reminder of the danger facing retirees if policymakers fail to act.”
Experts said covering the shortfall would require an immediate increase of 3.65 percentage points in the combined employee/employer payroll tax rate, bringing it to a total of 16.05%.
Lack of congressional action will only exacerbate the problem, CRFB said.
“The longer it takes to address Social Security’s solvency shortfall, the greater the cost of fixing it will become. Timely action would limit the scale of the adjustments, provide more time to phase in needed reforms, and create additional opportunities to enact targeted benefit enhancements,” CRFB said.
_______
©2026 Advance Local Media LLC. Visit al.com. Distributed by Tribune Content Agency LLC.
Sign in to get access to this free resource, and all of our whitepapers and reports.
Download this content today!
Register Now Already registered? Click here to Log In