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2026 Social Security Trustees Report: Social Security Retirement Trust Fund To Be Exhausted in 2032 Thumbnail

2026 Social Security Trustees Report: Social Security Retirement Trust Fund To Be Exhausted in 2032

Insights Retirement Funding

Each spring, I look forward to the new Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Since that's a mouthful, let's call it the Social Security and Medicare Trustees Report. Unlike many government publications, this one has a direct impact on the financial well-being of Americans — and this year's edition continues the trend of warnings about the coming insolvency of both programs.

The Headline Numbers

In the 2026 report, released June 9, the Trustees project that the Social Security retirement trust fund (OASI) will be depleted by late 2032 — one year earlier than last year's estimate. The Medicare Hospital Insurance (Part A) trust fund will be depleted in 2033, unchanged from last year, though its underlying shortfall has grown. When the OASI fund runs dry, Social Security will only be able to pay 78% of scheduled retirement benefits — an automatic 22% cut. When the Medicare HI fund is depleted the following year, hospital benefits face an automatic 11% reduction. The core problem: incoming payroll tax revenues are projected to fall short of program costs for the entire 75-year window of the report.

Why Medicare Part B and D are Different

Interestingly, the Medicare Supplementary Medical Insurance (SMI) program — covering Parts B and D — is not expected to face insolvency. The reason is structural: unlike the other trust funds, SMI's funding sources — beneficiary premiums and federal contributions from the Treasury — are automatically adjusted each year to cover projected costs. A key component for higher earners is IRMAA (Income-Related Monthly Adjustment Amount), which imposes surcharges on Part B and D premiums based on income from two years prior. If your income crosses certain bracket thresholds — whether from earned income, retirement distributions, or investment gains — you pay more. Because IRMAA brackets are indexed for inflation, these costs rise every year. While the built-in increases still appear to lag actual growth in Part B and D costs, the auto-adjusting structure is projected to keep SMI solvent through the full 75-year window.

What Might the Government do?

  • With no current plan to address the shortfalls, how might Washington act before this becomes a crisis? It's unrealistic to expect more than 70 million beneficiaries to simply accept benefit cuts. Possible solutions include:
  • Raising FICA taxes, which would reduce after-tax take-home pay for all workers.
  • Introducing a progressive payroll tax, requiring higher earners to pay FICA on a greater share of their income (currently, the tax applies only to the first $184,500 of wages).
  • Adjusting IRMAA brackets more aggressively, increasing Part B and D costs for retirees with higher incomes.

What You Can Do Now

There are several ways to protect yourself against the uncertainty:

  • Create a Financial Plan to model the impact of reduced benefits.
  • Adjust your retirement spending goals to assume Social Security is cut. How would this impact your plans?
  • Consider an annuity (or other guaranteed income strategy) for additional income in retirement. An income annuity could replace a projected shortfall in Social Security — either scheduled to pay at retirement or held in reserve if cuts materialize. Fees, liquidity, inflation protection, insurer strength, and product design should all be evaluated in the selection process.
  • Prioritize tax planning and Roth conversions. IRMAA surcharges are driven by your Modified Adjusted Gross Income, which includes IRA and 401(k) distributions. Qualified Roth IRA income, however, does not count toward MAGI for IRMAA purposes. Converting IRAs and 401(k)s to Roth IRAs now may mean higher taxes and IRMAA costs in the short term, but could significantly reduce your exposure in retirement.

There are other viable strategies worth exploring, and it may be wise to work with a financial planner or accountant to develop one tailored to your situation. Waiting to see how things "play out" may not be the best approach — because there is currently no guidance from Washington on how these shortfalls will be addressed.


This article is for general educational purposes only and does not constitute personalized investment, legal, or tax advice. Projections are from the Social Security and Medicare Trustees Report (June 9, 2026) and are subject to change based on economic conditions and legislative action. Strategies discussed — including annuities, Roth conversions, and IRMAA planning — involve complex considerations that vary by individual and should not be implemented without consulting your PTM advisor and a qualified tax professional. Important: PTM Wealth Management, LLC offers insurance products including annuities and may receive compensation in connection with their placement. For complete disclosures, including our Form ADV Part 2A, visit www.ptmwealth.com/disclosures. PTM Wealth Management, LLC is a registered investment adviser.