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How is Social Security doing? Well, there’s good news and bad news in the 2026 Trustees Report. How that news gets acted upon ... or not ... will have ramifications for all those counting on Social Security benefits to help support their retirement income.
First, let’s look at what the latest report is and says.
The 2026 Social Security Trustees report, released this summer, is the annual actuarial summary of the financial condition of the Social Security system. The report is presented by the Social Security Administration (SSA) to Congress and the president every year. The 2026 report provides detailed information and the latest insights into overall health of the largest program in the federal government.
Who gets Social Security benefits?
At the end of 2025, there were more than 70 million people collecting benefits.
- The largest number of workers in this number are 56 million retirees and their dependents. It is important to remember that a worker’s spouse can collect a benefit even if they have not paid into the Social Security system. The Social Security Fairness Act, passed in January of 2025, also expanded the eligibility to a great many new people who were previously excluded from spousal benefits because they were covered by a state or local government retirement system and had not paid into Social Security.
- By the end of 2025, there were 8 million people collecting disability income benefits from Social Security. These benefits were awarded to people who could no longer work at any job that exists in the national economy and expected that disability to last at least a year or result in their death. (Related: The Social Security disability lifeline)
- The final group of people collecting from Social Security in 2025 was survivors of workers who were covered by the system. At the end of 2025, there were 6 million survivors collecting benefits. These benefits are a form of life insurance that provides significant income resource to spouses and children of workers who have died. (Learn more: Social Security spousal and survivor benefits)
When added together, the benefits paid to the 70 million people totaled $1.609 trillion. Numbers of this size are often hard to visualize. So, another way of looking at this math is by the month. The monthly number is roughly $134 billion dollars.
This is really good news for the people covered by the program, and, these checks, which are cashed each month, are being directly returned to the economy for things such as food, transportation, education expenses, and health care.
Not enough to cover benefits
The bad news about these numbers is that the Social Security system is only taking in $1.449 trillion. This income comes from FICA payroll taxes, income tax on the benefits paid to workers, and interest earned on the Social Security trust fund.
Fortunately, for a long time, the SSA has been collecting more than the promised amount needed to pay benefits. Over the years, the surplus benefits were accumulated and held in the Social Security trust fund. This trust fund is an interest accruing account owned by the SSA backed by bonds from the U.S. Treasury. This fund was created for the day when benefits exceeded income.
However, with the wave of baby boomers now retiring, there is no longer a surplus of income. In fact, there has been a deficit of “payments in” versus “payments out” for some time. This deficit continues to increase as baby boomers keep retiring and living longer.
Without any change in the current funding, the Social Security trust fund will be gone around 2032. Without the trust fund, the benefits for the more than 71 million recipients, at that time in the future, will have to be reduced.
The exact amount of this reduction keeps changing each year, but based on the 2026 Trustees Report, it will be an estimated reduction of benefits between 17 to 22 percent. Remember that the system will not be totally out of money for all benefits, but there will be a sharp reduction in current and future benefits for everyone.
A long-known problem
For years, the Trustees Reports have been projecting and reporting this pending shortfall. The 2026 Trustees report continues to report it. The shortfall is not new news by any measure. The SSA has been urging congressional leaders to take action to address the shortage. Perhaps because of past trust fund surpluses, the problem of correcting the shortfall continued to be put off into the future. Now the time horizon for the surplus longevity is becoming very clear, and 2032 is a blinking warning on the radar. Clearly, the sooner Congress acts, the easier it will be to solve the problem.
Yet, to date, nothing has been done because it will require difficult decisions about raising revenue and possible reductions in benefits.
Tax increases? Benefit cuts?
Currently, there are some active proposals by members of Congress on how to address this looming shortfall and the political consequences of doing nothing to correct it. This activity is actually good news.
Here are a few ideas:
- Eliminate or change the Social Security wage base. For 2026, the wage base is $184,500, with workers earning more than this amount no longer paying into the Social Security system.
- Increase the 6.2 percent payroll tax on earned income, paid by the worker and matched by the employer, to some higher number for all workers.
- Change the definition of full retirement age from 67 to a higher number for future retirees.
- Cap the size of the monthly benefit.
- Change the cost-of-living adjustment (COLA) formula that applies to the payment increases.
There will likely be even more ideas and suggestions for ways to eliminate the reduction in benefits and to solidify the funding of Social Security for the next 75 years.
This national debate will continue and intensify as 2032 approaches. That’s because for Congress to do nothing is really not an option for the 70 million (and growing) people in the country who are currently collecting benefits or for the 185 million workers who are currently paying thousands of dollars into the system each year.
Social Security is an imbedded part of the DNA in our society. But, given the math in the latest Trustees Report, it needs to be fixed.
Discover more from MassMutual …
How to plan for retirement as people are living longer
4 simple ways to delay Social Security
Social Security Blue Bar Report: Why so many need it
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