Trustees warn benefits will face automatic 19% cut by 2034 as aging population strains system.
The trustees for Social Security and Medicare released their annual report on the status of the entitlement programs' trust funds, which are expected to be depleted sooner than previously thought.
The Social Security and Medicare trustees "found that the Social Security and Medicare programs both continue to face significant financing issues."
Trustees found that if Social Security's Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds were combined, the trust funds would be able to pay 100% of scheduled benefits until 2034, one year earlier than reported last year. The depletion dates for both Social Security trust funds advanced by three calendar quarters compared to last year.
At the time of depletion in 2034, the trust funds would be able to pay only 81% of scheduled benefits, meaning Social Security recipients would see a mandatory 19% cut automatically. That's because Social Security benefits are financed through a combination of payroll taxes from current workers along with the trust funds, which would leave the program relying solely on payroll tax revenue once the trust funds are depleted.
For comparison, the average monthly Social Security benefit as of January 2025 was $1,976, according to Social Security Administration (SSA) data. A cut of 19% would amount to a reduction of $376 per month, lowering the payment to $1,600 a month.
Medicare's Hospital Insurance (HI) trust fund is projected to be depleted in 2033, three years earlier than last year's report, according to the trustees. At that time, 89% of scheduled benefits would be payable, leading to an 11% reduction in payments relative to pre-depletion levels.