Social Security Trust Fund Report: Here's Where the Program Stands on Benefit Cuts and COLAs

Every year, the Social Security Board of Trustees releases a report detailing the current status of the program and its outlook for the future.

The report includes details on everything from the state of Social Security's trust funds to projected COLAs to the program's operating costs and more. Whether you're already receiving benefits or are planning to file soon, it's wise to keep updated on where Social Security currently stands.

The Social Security Administration (SSA) released its 2024 trustees report in mid-May, and here's what it says about the program's future.

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The trust funds are still in trouble, but there's improvement

One of Social Security's most pressing problems is the depletion of its trust funds: the Old-Age and Survivors Insurance (OASI) fund and the Disability Insurance (DI) fund. The OASI is the fund responsible for retirement benefits, but both play an integral role in the program.

Currently, Social Security's costs are exceeding its income. The program is paying out more in benefits than it's receiving from taxes and other income sources, which has led to a deficit. For now, the SSA is able to tap the trust funds to continue paying out benefits in full. Eventually, though, those funds will run out.

According to the latest trustees report, the OASI fund is expected to be depleted by 2033. If that happens, the program's income sources will only be enough to cover around 79% of scheduled benefits. If the SSA dips into the DI fund as well, both trust funds will likely run out by 2035. At that point, there will only be enough cash to cover around 83% of benefits.

The bad news is that benefits could be coming as soon as 2033, or 2035 at the latest. However, these figures are slightly better than last year. According to the 2023 trustees report, the SSA expected both trust funds to be depleted by 2034, with the ability to pay out 80% of future benefits. It's not a major difference, but it is a step in the right direction.

We likely won't see any significant COLAs

The last few years have been record-breaking for the cost-of-living adjustment (COLA), an annual boost in benefits designed to help Social Security keep pace with inflation. The 8.7% COLA in 2023 was the highest in four decades, and the year prior also saw a massive 5.9% raise.

Based on the SSA's latest estimates, though, it's unlikely that we'll see numbers like that again anytime soon. According to the trustees report, the highest COLA we can expect between now and 2034 is around 3% -- but it could be as low as 1.8%.

Year COLA (Low Estimate) COLA (Intermediate Estimate) COLA (High Estimate)
2025 2.5% 2.6% 2.7%
2026 1.8% 2.2% 3%
2027-2034 1.8% 2.4% 3%

Source: Social Security Administration. Table by author.

Because the COLA reflects inflation rates, it's impossible to say for certain where future adjustments may land. We won't even know the true COLA for 2025 until the U.S. Bureau of Labor Statistics releases third-quarter inflation data later this year, so the SSA's estimates are simply an educated guess. That said, they are the most accurate educated guess available right now.

The state of the trust funds may also affect the future COLAs. Higher COLAs mean the SSA has to pay out more in benefits -- and pull more money from the trust funds. The SSA could be reluctant to raise COLAs unless absolutely necessary, then, to help protect the trust funds and avoid widespread benefit cuts.

Nobody knows exactly what the future holds for Social Security, especially when it comes to the trust funds. Lawmakers could develop a solution in the next decade to solve the program's cash shortage and avoid cuts. But until then, it's wise to stay informed -- and perhaps start preparing for the possibility of smaller checks in the future.

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