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When Will Social Security Reserves Run Out? A New Report Estimates the Date

The Social Security Trustees annual report this week gives a fresh estimate for how long Social Security reserve funds will last.

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Clifford is a managing editor at CNET, where he leads How-To coverage. He spent a handful of years at Peachpit Press, editing books on everything from the first iPhone to Python. He also worked at a handful of now-dead computer magazines, including MacWEEK and MacUser. Unrelated, he roots for the Oakland A's.
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The fund reserves that help pay for Social Security are running out and have until 2035 when they will reach insolvency and recipients will see a cut in benefits, according to a new report released by the Social Security Trustees on Monday. 

Without a change in how Social Security is funded, the program would then be bringing in enough money to pay 83% of the benefits to those who are part of the program. The report notes [pdf] that the lawmakers have "a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall," but need to act in a timely way.

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According to the board of trustees, at the end of 2023, about 67 million people received benefits through the program, including retired workers and dependents of retired workers, survivors of deceased workers, and disabled workers and dependents of disabled workers.

Here's what to know about Social Security funding and what insolvency could mean for your benefits. For more, here's when you'll receive your May Social Security check and why SSI beneficiaries are receiving two checks in May.

How is Social Security funded?

Social Security is funded through a payroll tax set by law, where US workers and their employers each kick in 6.2% of wages up to the taxable maximum of $168,600 (in 2024). Those who are self-employed pay 12.4%.

Social Security taxes and other income are deposited in Social Security trust funds managed by the US Treasury. These trust funds pay out Social Security benefits, and any surplus is invested in special government securities.

Why is the Social Security fund running out of money?

The current workforce is unable to keep up with the strain retiring baby boomers are putting on the Social Security system. The trustees estimate that reserves are sufficient to cover projected program costs over the next 10 years. Once reserves are used up, beneficiaries will see an across-the-board benefit cut, the trustees estimate.

What the Social Security Trustees recommend doing to fix the funding shortfall

Social Security Trustees said lawmakers can act now to close the fund gap and avoid insolvency by raising the payroll tax rate, cutting benefits or some combination of both. The federal government could keep the fund fully solvent by increasing revenue with a permanent payroll tax rate increase of 3.33%, by reducing benefits for all recipients by 21% or by reducing benefits for new beneficiaries by 25%.

President Joe Biden this spring proposed another way to extend Social Security's solvency by raising the taxable maximum cap on higher-income earners.

For more, here's the maximum amount of Social Security you could receive this year and how to apply for Social Security.