Social Security's main trust fund could be depleted a year earlier than expected, according to a projection from the Congressional Budget Office (CBO) released earlier this month.

The CBO forecasts that the Old-Age and Survivors Insurance Trust Fund — one of the two funds Social Security taps to disburse benefits — will be exhausted in 2032. The agency, which provides budgetary analysis to Congress, estimated last year that the trust fund would run dry in 2033.

Although the Social Security Administration wouldn't stop administering benefits if the trust fund reserves are depleted, the agency could be forced to trim the amount it pays to beneficiaries, according to experts.

"My takeaway from all of this is we don't have much time to spare to address the shortfall," Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, a nonprofit advocacy group. "If there's not enough revenue coming in payroll taxes — and I don't see that changing — benefits are going to be cut dramatically."

The Social Security Administration did not respond to a request for comment.

Why CBO changed its forecast
The CBO changed its Social Security funding projection after updating its economic forecast, which predicts hotter inflation in the coming years. That could affect Social Security's annual cost-of-living adjustment (COLA), which is aimed at ensuring that inflation doesn't erode beneficiaries' purchasing power.

Higher inflation could mean a larger COLA, which would draw down the trust fund more quickly. The CBO forecasts a COLA of 3.1% for 2027, on the higher end of projections. The agency announced a 2.8% COLA for 2026.

The CBO also projects Social Security trust fund income will be lower because of a reduction in individual income taxes and payroll taxes.

Diminishing trust fund reserves
The Social Security Administration started tapping into the trust fund reserves in 2021, when the total cost to provide benefits started to outpace the agency's income. Social Security, which is funded chiefly through payroll taxes paid by workers and employers, is facing greater financial strains as the U.S. population ages and more people claim retirement benefits.

"As long as people are paying in, money is coming in," Richtman said. "But the point is, it's not enough to pay full benefits. The trust fund has been relied on over the last few years to fill in that gap."

The Center on Budget and Policy Priorities, a Washington, D.C.-based nonpartisan think tank, said last year that the Social Security Administration will be able to pay roughly 81% of promised benefits once the trust fund reserves evaporate.

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