Why It Matters
The federal government's largest benefits program is now drawing down its asset reserves to cover the gap between what it collects and what it pays out. According to a new Congressional Research Service report, in 2025, Social Security had total income of $1.45 trillion and total expenditures of $1.61 trillion.
About 71 million people currently receive monthly Social Security benefits, while roughly 186 million workers contribute to the program through payroll taxes. Social Security's projected financial shortfall has prompted discussion among policymakers about changes to Social Security.
The Big Picture
Social Security operates largely on a pay-as-you-go model funded primarily by dedicated payroll taxes. Workers and employers each pay 6.2 percent of covered earnings, generating most of the program's revenue.
For many years, Social Security collected more in revenues than it needed to pay out in benefits, resulting in accumulated asset reserves. The program now depends on drawing those reserves to bridge the gap between incoming revenue and outgoing benefits.
Revenue-increasing options include raising the payroll tax rate or eliminating the taxable maximum, which currently caps Social Security taxation at $184,500 in earnings for 2026. Cost-reducing measures range from raising the full retirement age to adjusting annual cost-of-living adjustments (COLAs).
Policy changes implemented sooner rather than later would require revenue-increasing or cost-reducing provisions that are smaller in magnitude.
The Bottom Line
Without legislative action, Social Security's trust funds are projected to be depleted by 2034, after which the program could pay only about 83 percent of scheduled benefits from ongoing tax revenue. Policymakers face a choice between revenue-increasing measures, cost-reducing provisions, or some combination of both to restore long-term solvency.
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