Social Security's 2032 Warning: What the Latest Trustees Report Means for Your Retirement Plan
Every year, the Social Security Board of Trustees releases a report that answers one of the biggest retirement questions in America: will Social Security continue paying full benefits, and for how long?
The latest update is getting attention because the financial outlook for Social Security continues to move in the wrong direction. The Old-Age and Survivors Insurance Trust Fund, which covers retirement and survivor benefits, is now projected to be depleted in the fourth quarter of 2032.
That does not mean Social Security disappears in 2032. It means that if Congress does nothing, the trust fund reserves could be exhausted, and the program would rely mainly on incoming payroll taxes to pay benefits.
Current projections suggest those payroll taxes would cover about 78% of scheduled benefits. In plain English, that means retirees could face a potential benefit reduction of roughly 22% if lawmakers do not make changes before then.
Why Social Security Is Under Pressure
Social Security is funded primarily through payroll taxes. Current workers pay into the system, and that money helps fund benefits for current retirees.
The problem is that fewer workers are supporting more retirees. This is largely a demographic issue.
1. Lower Birth Rates
Lower birth rates mean fewer future workers paying into Social Security. When fewer people enter the workforce, less payroll tax revenue is available to support future benefits.
2. More Retirees Collecting Benefits
Millions of Baby Boomers are already retired or entering retirement. As more people claim benefits, Social Security pays out more money each year.
3. Longer Life Expectancies
Many retirees are living longer than previous generations. That is good news personally, but it also means benefits may need to be paid for a longer period of time.
4. Lower Workforce Growth
The Trustees Report also points to assumptions around lower net immigration and labor force growth. Since Social Security depends heavily on payroll taxes, the number of workers matters.
Is Social Security Going Bankrupt?
No. Social Security is not going bankrupt in the way many people imagine.
Even if the trust fund reserves are depleted, payroll taxes would still come into the system. Benefits would still be paid. The issue is whether benefits can continue being paid at 100% of scheduled amounts.
Final Thoughts
The latest Social Security Trustees Report is not a reason to panic, but it is a reason to plan.
Social Security is still likely to remain an important part of retirement income for millions of Americans. However, relying on it as your only source of income may create risk.
A strong retirement plan should account for uncertainty. That means building multiple income sources, coordinating your claiming strategy, reviewing taxes, and making sure your plan can adapt if future Social Security rules change.
Daniel Wendol
Item #1
00:00:02
June 9th, 2026, the Social Security Board of Trustees released their annual report on the financial status of the Social Security program. This is the most important yearly update we can get from Social Security by far. And the question they ask and answer in this report is, will we be continuing to pay benefits to Social Security recipients on in full benefits and for how long? And the numbers aren’t too good. So, I’m going to cut right to the numbers, give you the new numbers, and talk about
00:00:42
what’s changed and what it means for you in retirement planning. Speaking of retirement, let’s bring in my co-host. Soon to be >> potentially retired, soon to be potentially claiming Social Security. >> Hopefully not. >> Tony, welcome to the show. Here’s the stats. The trust fund, Social Security trustees report, the combined old age and survivors insurance disability insurance trust funds, that’s what Social Security is known as, better known as Social Security, are projected to pay 100% of
00:01:16
scheduled benefits until the third quarter of 2034. That hasn’t changed. That’s nothing new. We knew this. Dan, tell me something new that the report gave us. [laughter] Here it is. The OASI, which I’m shortening now. The trust fund is now projected to deplete in the fourth quarter of 2032. I’m breaking these out because there’s really two parts of Social Security. People many people don’t realize. You have the old age and survivors insurance and disability insurance. Those are two
00:01:51
separate things that combine into the whole program. I’m just looking at just the social security part, the part for the regular people that get it, not the disability. The disability insurance trust fund is funded all the way for probably a hundred years. It’s the regular program that’s having trouble. But what happens is you combine them into one big pool. And if you do that, we’re out by fourth quarter of 2032, Tony. >> Wow. >> It’s creeping up. Yeah, it’s I think
00:02:24
originally it was like 2036, then it was 2034, then 2033, now we’re hearing 2032. >> Yes, we’re in the 2032s. >> Do I hear 2031 coming? [laughter] >> I mean, we’re only what is that first auction? >> Yes. And so, what happens at that point after depletion? it could pay about 78% of the benefits if you’re looking at just you keeping the disability separate. 78% 22% shortfall. That is a problem, Tony. >> It’s huge. And you know, we’ve heard people talk about this. We’ve talked
00:03:02
about the problems with Social Security. And you’ve even made predictions that certain presidents, lame duck presidents who are on their way out, who didn’t have the political pressure could actually kind of win by shoring up social security and uh you know make that their claim to fame that they fix social security. But it hasn’t happened, Dan. >> No, it hasn’t. I want to I want to talk about why this is happening because I don’t think a lot of people understand the true math and the reasoning behind
00:03:31
it, right? and then what you should be doing about it. >> Um, and yeah, will it be fixed? We’ve done shows on that >> and you >> you and I disagree with how to fix it, but I think we’re we’ve come to a conclusion uh at the end here that you and I are going to be on the same page. >> Oh, I think you and I are on the same page on a lot of ways to fix it. Not all. Just not all. And I think we need to understand >> Yeah. I think first we need to understand the gravitas of the
00:04:00
situation. Here’s another truth. Social Security is dying. >> It is the combined reserves are about 2.5 trillion at the end of 2025. That’s what they reported. That’s down 160 billion from the previous year 24. >> Uh so now annual costs are exceeding income. We know this. That’s what’s been happening. So less money is coming into the program than is coming out. So that’s a deficit. And uh the new numbers are the 75-year actuarial deficit is 4.42%. 4.42% of taxable payroll. That’s the
00:04:38
deficit. It used to it was the year before was 3.82. So that’s a 16% increase. The worsening of the long-term shortfall. It’s starting to speed up. That’s the problem. That’s the problem. Well, didn’t they lower didn’t they lower the amount uh of social security that was taxed on payroll out of payroll, the social security tax from 7.2 to 6.2 at one point? >> I think they did. >> And that’s going to be one of the main factors changing it. I want to go through the three big reasons why, but
00:05:14
you’re right. that payroll number whether either reduced uh as a percentage or just less people putting into it. That’s the big driver here. >> Yeah, there are less people putting into it. That’s a huge driver. And there are more people turning 65 every day and filing, right? >> Yes. More people taking out, less people putting in. Here’s a quote from the current Social Security Commissioner, Frank Biziano. Maybe Biziano. Um, quote, “It is important for lawmakers and the
00:05:48
Social Security Administration to work together to ensure the trust funds continue for future generations.” Captain Obvious here. Um, it’s important for the government to work together. So, the question is, will they what’s causing it? Will the government help us? Tony, you know what I think about that? >> The last time we were at this type of spot with Social Security was in the late 70s, early 80s. And I think it’s There’s no more appropriate way to answer this question with than these
00:06:19
nine words. >> I think you all know that I’ve always felt the nine most terrifying words in the English language are I’m from the government and I’m here to help. [snorts and laughter] >> I love that. >> I absolutely love that. [laughter] [snorts and gasps] >> Yeah. So, of course, the Social Security Commissioner is going to say, “We got to do something.” Of course. But do something then. So, here’s a quote from the um from another group. I’ve been I don’t
00:06:51
know much about the group, but I like the data they put out. The Committee for Responsible Federal Budget. So, Maya McGinness is the president and she says >> I’ve interviewed her and if Dan, if you want to get Maya on the show, we can. I’ve interviewed her probably four or five times. Yeah. >> Well, this is Oh, great. Well, then I want to read a quote that I thought is pretty good. >> Yeah. >> Quote, this is from her. Quote, “Politicians have known about and
00:07:19
neglected these 40 these programs for the last 40 years, but the program problems are much worse now thanks to de decades of inaction solutions like eliminating the tax taxable minimum or progressive pricing indexing benefits. They’re no longer close enough to restoring insolvency. And thanks mainly to the tax cuts in the one big beautiful bill and worsening demographics, social security projected shortfall is full 16% worse than last year’s. Couldn’t say it better myself. I didn’t.
00:07:54
I I butchered her. Let’s get her on the show because that’s a good Let’s do that, Tony. >> Yeah. And you and you and her align a lot with this type of thinking. and she’s really they’re hawks uh about the um the budget deficit. Um and uh they’re nonpartisan, but they’re all for reducing the federal deficit, cutting government spending, >> that type of type of >> So, we’ve done a show on what you could do about it. We have a poll on the
00:08:24
YouTube channel that you can answer what you think is going to happen with social security. But I want to make clear what is causing there’s three main issues that pull from this trustees report that are causing this. I just want to go through them quick to sum up. So here are the three things that are really driving the conversation. One, the lower assumed fertility rates. And that plays right into the fact that there’s less people. There’s less people being born, so there’s less people
00:08:55
putting into the for the future. The way social security works is your payroll gets taxed. My son the other day sent me a uh his first big payroll check which included overtime. Um and he was like, “What is this?” Pointing to social security. He’s got federal, state, social security, and Medicare tax in there. He’s like I’m like just get ready. So 1.75 children per woman instead of 1.9. So they’re assuming the birth rates are going to go down. So that’s what’s
00:09:30
driving this uh this insolvency. >> It just means fewer people are entering the workforce than are retiring right now. And that’s the you know fewer workers, more retirees. >> All right. And a lot of people call social security a Ponzi scheme or a pyramid scheme because there’s less people at the bottom now, you know, paying the top. So, uh, boomers are taking more. It’s just a demographic issue, right? So, that’s number one. Number two is lower net immigration. So
00:10:01
>> yes, >> um they’re assuming the trustees are assuming that immigrations are going to go down based on tightening of the border, which means less workers putting into social security for the for the people that are retired. >> Yeah. >> And I have a little bit of a rant here and you know me, I have a hot take. I know. I know. And you and I may disagree on this, but when it comes to immigration, uh it’s so funny because I’ll go down to my hometown of
00:10:30
Warthingington, these farmers sit around and say all these, you know, they have a meat packing plant there. Uh the town is now 53% Hispanic. Um and they’re like, you know, they’re here illegally and they’re not paying taxes. And I said, “No, actually the situation is they’re working at the packing plant and they are out of their wages. Social Security is being taken.” But guess what they can’t do? They can’t file for Social Security. They are paying into the system and
00:11:05
not taking out. So they’re actually helping you at that point. and they are paying taxes because taxes are being paid taken out of their paycheck. So that’s a misnomer. Um but I think the problem is when you have 2 million people a year or whatever coming across the border, if they are those that are working, I’m not saying all of them are here to work, but a lot of them are working in bad jobs like meat packing plants and there are taxes being taken out and they are contributing to the
00:11:35
economy because they are consumers as well. And if you remove that, we’re starting to see the impact of that. Um, I’m not saying we should just let open borders. That was that didn’t work well either. So, there has to be some kind of compromise. But I I just think people need to look at it realistically. And it can impact Social Security. We have that’s 2 million fewer workers that are contributing. >> Well, here’s the deal, Tony. People don’t realize that yes, the immigrants
00:12:04
that are coming in now or some like my son entering the workforce now, they’re putting into social security and that money is going to pay the people that are claiming social security. That’s what happens. Money’s coming in, not enough is there. The deficit is made up by pulling from the trillions that are there and that’s slowly going to go down and that’s going to be gone by 2032. So not taxing those people and having less people working is not helping. What I think people are getting confused with
00:12:31
is the other social programs that have nothing to do with social security that are draining the federal budget and so welfare, food stamps, uh Medicaid, those types of programs, rightly so. People are upset with fraud, people abusing it, and [clears throat] so that could be fixed. So, but we could walk and chew gum at the same time. We can shore up social security and also improve those programs so that not money is not going out the back door. So, however, if you just take social security in a silo, which it is, you
00:13:03
look at it, you want more people putting into it. So, you want those workers adding to it. And a lot of people get that confused, but they don’t. The trustees know it, and they’re saying that’s another reason why it’s going down and faster is because we have less immigration. And finally, that last point, the one big beautiful bill from 2025. Remember, beautiful bill, right, Tony? Beautiful. It reduced revenue on social security benefits because less people are paying or more people are
00:13:35
paying less taxes. The bonus deduction, I did a rant on it in the past show. Social Security is still taxable. Nothing’s changed, but the bon senior bonus deduction of $6,000 per person over 65 reduces the amount of money coming in from social security taxation of the taxable benefits. Social security is taxable. If you put less of that taxable, less money is going into the kitty to pay social security benefits. So, the one big beautiful bill, while helpful, and I’m a big proponent of paying less taxes, has also deteriorated
00:14:13
the social security system. >> Those are the big three. >> Yeah, that standard deduction for those over 65 of $6,000. What that did is it uh took a lot of people that would have had to pay tax on their social security uh are no longer paying tax on social security. So that’s income that would go into the social security fund that isn’t. Is that what you’re saying? >> Right. Right. So less is coming in from the taxation of social security benefits. >> But that but again it’s a demographic
00:14:48
shift. We have to deal with it. Social security trustees are telling us, hey, it’s happening sooner. Uh now keep in mind this is not going to impact people now. We’re talking years down the road, but those years are shrinking. And so the question is, are we going to do anything about it? Social Security trustees are saying, just like any common sense person will say, the sooner you fix the problem, the easier the fix will be. But as the um the Maya said in that quote, hey, we’ve been
00:15:18
known this for years. We haven’t done anything about it. So now the idea of just raising the cap on taxable earnings, that used to be enough, now it’s not enough. the idea of maybe raising the retirement age that oh let’s just raise it a year that used to be enough now it’s not enough because we waited too long to make the change now all of a sudden we are feeling the pain and so I think the solution is going to be a combination we’re not going to get into it we’ve done shows on it but I
00:15:44
think the question now becomes will we do it when are we going to do it and what are you going to do about it because you’re watching this show still and you’re saying I’m thinking about taking it early I’m thinking about when am I going to take it do I even want to put into it. A lot of people don’t even want to be part of it anymore. Watch the show we did on taking it early because it’s going to run out. We did a show that it says makes sense. Take it at 62 maybe for you. So, watch that. But be
00:16:10
proactive. Talk to your representatives. Let them know, hey, we want to fix. It’s going to be painful for everybody, but the sooner we take the rip the band-aid off, the better we be. But, uh, Tony, I’m going to say this. Uh, no one’s coming to save you. So, if you’re relying on social security for 100% of your income in retirement, you better start planning plan B. And that’s what we’re going to talk about next week. We’re going to do a show on what do we do for income outside of social
00:16:37
security. That’s going to be. So, tune in to that one. Stay tuned. And thanks again, Tony, for a good show. We’ll catch everyone next week. I’m going to grab