No, Social Security is not going to go bankrupt

Social Security faces legitimate funding challenges, but it won’t completely run out of cash for monthly benefit payments.

An annual government report released on Monday, May 6, provides new estimates on the budget outlook for Social Security, which is a federal program that provides people with an income when they retire or can’t work due to disability. 

The report highlighted that Social Security’s combined trust funds, which help support monthly benefit payments to retirees and people with disabilities, are estimated to be depleted by 2035, one year later than previously projected. Social Security’s retirement trust fund alone is expected to run out in 2033.

Social Security’s funding challenges have left some people worrying about the program’s future, in part because lawmakers have warned over the years that it will eventually go bankrupt. 

But, ahead of the Social Security trustees releasing their annual report, an advocacy group called Social Security Works claimed in a post on X that it’s “impossible for Social Security to go bankrupt.”

VERIFY reader Leroy also asked if “Social Security is going to end in the near future.”

THE QUESTION

Is Social Security going to go bankrupt?

THE SOURCES

THE ANSWER

This is false.

No, Social Security is not going to go bankrupt. But the program faces legitimate funding challenges that will most likely lead to lower monthly benefit payments in the future. 

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WHAT WE FOUND

Claims that Social Security will go bankrupt are false. The program won’t completely run out of cash for monthly benefits, even if its trust funds are depleted, since it always receives income from taxes.

However, the program’s current funding challenges will most likely lead to benefit cuts in the future. 

Social Security is often referred to as a “pay as you go” program. That’s because benefits are primarily funded through a dedicated payroll tax, which is deducted from every paycheck you receive. Both workers and employers are required to pay Social Security payroll taxes.

As long as workers and employers keep paying payroll taxes, Social Security recipients will continue to receive monthly benefit payments, AARP and the Center on Budget and Policy Priorities (CBPP) explain.

The program also receives funding from income taxes that some beneficiaries have to pay on a portion of their benefits.

RELATED: Social Security benefits are taxable for some people, depending on their income

But Social Security payments could be lower than expected in the future. That’s because the program’s trust fund reserves could be depleted within the next decade, according to the most recent estimates. 

Social Security’s income is deposited into two financial accounts called trust funds – the Old-Age Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. Those trust funds are used to pay out Social Security benefits.

The trust funds hold money that isn’t needed in the current year to pay benefits and other expenses. By law, that money is invested in special Treasury bonds that are guaranteed by the U.S. government and earn interest, the Social Security Administration (SSA) explains.

Social Security’s costs are growing as more baby boomers retire and collect monthly benefits, the CBPP says

When Social Security collects less revenue than it needs to pay benefits, the program must cash in trust fund reserves to help cover the cost of monthly payments.

Starting in 2021, Social Security’s total cost exceeded its total income. At that point, the program began drawing down trust fund reserves to help pay for benefits, according to the CBPP. 

SSA has warned for more than a decade that Congress would “need to make changes to the scheduled benefits and revenue sources” for Social Security in the future. Without action from lawmakers, the trust funds will eventually run out of cash reserves. 

If this happens, that doesn’t mean benefit payments will stop. But beneficiaries will see less money in their checks, with Social Security relying only on incoming tax revenue and other income to make payments.

The 2024 Social Security Trustees Report provides the latest projections for when the trust funds are expected to run out of cash reserves.

The OASI Trust Fund, which pays monthly benefits to retired workers, their spouses and survivors of deceased workers, is expected to be able to pay full benefits until 2033, according to the trustees report. At that point, only 79% of those scheduled benefits would be payable. 

The DI Trust Fund, which pays monthly benefits to disabled workers, their spouses and children, is expected to make full benefit payments through 2098.

If the two trust funds were combined, they would be able to pay full benefits until 2035. The trust funds can’t be combined unless Congress passes a new law allowing it, but the combined depletion date is often “used to indicate the overall status of the Social Security program,” the trustees say. 

This story is also available in Spanish / Lee este artículo también en español: No, el Seguro Social no se irá a la quiebra

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