The trust funds for Social Security and Medicare will run out of money in less than a decade, according to a report released Wednesday, as the programs’ trustees warned that the funds’ depletion date is significantly closer than predicted a year ago. If Congress does not overhaul the programs’ financing, automatic cuts will slash Social Security benefits by 23 percent and Medicare hospital benefits by 11 percent in 2033, the report said.

Here’s what to know about the current state of Social Security.

<b>Is Social Security solvent?</b>

For today, yes. But in last year’s annual report, the trustees projected that Social Security would become insolvent by 2035 and Medicare in 2036. They now predict that Social Security’s fund will run out of money in 2033, or in 2034 if Congress changes the law to combine the separate funds for old-age benefits and for disability insurance. They also now forecast that Medicare’s hospital insurance fund will run out in 2033.

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The Social Security and Medicare trust funds are separate from the federal budget and funded by a dedicated payroll tax paid by employers and employees, with each side kicking in 6.2 percent of gross wages up to a certain threshold, currently $176,100 per year. Any wages exceeding that amount are exempt from Social Security taxation.

Medicare collects an additional 1.45 percent of gross wages, bringing total deductions to 7.65 percent per worker.

For years, the programs have been spending more money than they take in, as an aging workforce means more retirees are receiving benefits and fewer workers are paying taxes into the system.

If the trust funds dry up, retirees will still receive benefits as long as workers are paying the payroll taxes. But the amount will drop.

In Wednesday’s annual report, the four trustees — Treasury Secretary Scott Bessent, Secretary of Health and Human Services Robert F. Kennedy Jr., Labor Secretary Lori Chavez-DeRemer and Social Security Commissioner Frank Bisignano — called for prompt legislative action to address the looming insolvency. (Two positions on the board of trustees that are appointed directly by the president have not been filled for a decade.)

<b>What’s new in the 2025 Social Security and Medicare trustees report?</b>

The trustees cited several reasons for the funds’ looming insolvency.

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First, a bipartisan law enacted at the end of President Joe Biden’s presidency hiked benefits for more than 3 million retirees. The law was meant to correct imbalances in the benefits paid to some workers who spent part of their careers in state and local government, such as police officers and teachers. When lawmakers voted to raise their benefits, projections at the time said the law would hasten the trust fund’s depletion by at least six months.

In addition, the trustees predicted slower earnings growth for workers over the next decade than they had previously forecast.

They also reassessed their predictions about the U.S. birth rate. While Wednesday’s report still predicts the U.S. fertility rate eventually will reach 1.9 children per woman, up from 1.6 currently, the trustees now see that change fully occurring by 2050, instead of their previous prediction of 2040 — which means a longer period of fewer workers paying into the program.

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Speaking on the condition of anonymity to discuss the report before its official release, a senior government official said that a crackdown on immigration — which generally harms Social Security’s bottom line because immigrants pay more money into the program than they claim in benefits — might prevent that fertility rate from ever being realized. “Historically, the immigrant population has had higher fertility rates,” the official said.

Some experts have long questioned the trustees’ reliance on a higher fertility rate to shore up the long-term health of the program. “It just seems to me that’s not a realistic assumption,” American Enterprise Institute senior fellow Mark Warshawsky said, calling a change “long overdue.”

The trustees also said that Medicare spent more money on beneficiaries’ hospital bills than they forecast in 2024, which led to them moving their predicted depletion date up by three years — the biggest change from last year’s report to this year’s. They predicted even more spending on hospital and hospice care in the near future. Another senior government official, also speaking on the condition of anonymity before the report’s release, said actuaries aren’t sure why spending exceeded predictions last year, though he speculated that it might have been because of delayed medical procedures that patients put off during the coronavirus pandemic.

<b>What happens when the Social Security trust fund runs out?</b>

The entitlement programs would still be financed by payroll taxes and therefore continue, but benefits would decrease.

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Such a scenario would be so unpopular that Congress would face great pressure to act. Lawmakers would probably need to consider a mix of benefit cuts plus new revenue — such as higher taxes to fund Social Security, perhaps taxing wages above the current threshold of $176,100.

“Congress will act. The depletion date is really an action-forcing event,” said Nancy Altman, president of Social Security Works, a lobby that advocates taxing the rich to fund more generous benefits.

Romina Boccia, an economist at the center-right Cato Institute who focuses on entitlement programs, said the latest projections aren’t likely to push Congress to act yet.

“Congress is still in giveaway mode,” Boccia said, citing the current negotiations over the massive Republican tax-cut and spending package. “We can’t even get a Republican-controlled Congress and White House to make significant spending reductions. … There’s certainly no courage to make the tough political choices needed, absent a crisis.”

<b>Do I get back from Social Security what I put in?</b>

Not exactly. Each retiree’s monthly benefits are determined by a formula that takes into account their lifetime earnings. But under its progressive structure, lower earners’ benefits are higher in proportion to their wages, while higher earners’ benefits are relatively lower.

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Some researchers argue the United States should save money by cutting benefits for high earners and reframe Social Security primarily as a safety net for poor retirees. Compared with the rest of the world, U.S. benefits are already lower than in most industrialized countries, and American workers retire later than most.

<b>How can I maximize my Social Security benefits?</b>

Benefits are based not just on how much you earn during your career, but also on when you retire. While Social Security defines “full” retirement age as 66 or 67 (depending on your birth year), retirees can choose to start taking Social Security at any age between 62 and 70 — and will get a larger monthly check the longer they wait.

Of course, you need to take into account the fact that if you wait until 70, you won’t be receiving any check at all in the earlier years, even if you get a larger check for the rest of your life. So each retiree needs to make their own calculation about what is best for them.

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Regardless of any legislative outcome, workers can take steps to make sure they have enough savings in addition to Social Security, such as making retirement contributions a top financial priority regardless of their age.

Political turmoil is also weighing on Americans nearing retirement.

As the U.S. DOGE Service under Elon Musk slashed the workforce at Social Security earlier this year, causing issues in customer service for beneficiaries, more people opted to file for early retirement and start receiving their benefits right away, anxious about changes to the program that could prevent them from claiming them if they had waited.

But experts have generally urged people to wait to receive their full benefit and trust that the program would still be there for them.