The Social Security Trust Funds

Social Security is financed mainly by a payroll tax of 12.4 percent on wages up to an annual limit, split between workers and employers, plus income taxes on some benefits and interest. The money flows into two trust funds at the Treasury: the Old-Age and Survivors Insurance Trust Fund, created in 1940, and the Disability Insurance Trust Fund, created in 1956. Surpluses not needed for current benefits are invested in special-issue Treasury securities that pay interest and are backed by the full faith and credit of the United States.

After a financing crisis in the early 1980s, a bipartisan commission led to the Social Security Amendments signed on April 20, 1983, which raised payroll taxes, gradually raised the full retirement age to 67, and began taxing some benefits, building reserves that peaked at about $2.9 trillion. A Board of Trustees, made up of the Secretaries of the Treasury, Labor, and Health and Human Services, the Social Security Commissioner, and two public trustees, reports each year on the funds' condition over 75 years. Since 2021 the program has paid out more than its income, drawing down its reserves.

The 2026 trustees report, released June 9, 2026, projected that the retirement fund's reserves would be depleted in 2032, a year earlier than the 2025 report, after which incoming taxes would cover about 78 percent of scheduled benefits unless Congress acts, and that the combined funds would last until 2034. The Social Security Fairness Act, signed on January 5, 2025, repealed provisions that reduced benefits for some public employees, modestly speeding depletion. Some reformers favor raising or eliminating the cap on taxable wages, while others favor slowing benefit growth or raising the retirement age, and many economists note that the trust funds are an accounting device within a single federal budget.