01/25/2026
The 7 year haircut is coming.
More than 74 million Americans received Social Security benefits in November 2025, per the Social Security Administration (SSA). These payments rely on the Old-Age and Survivors Insurance (OASI) trust fund and the Disability Insurance (DI) trust fund. However, for decades experts have speculated that these Social Security trust funds would eventually struggle to distribute benefits, with predictions in 1983 stating that funds would be exhausted by 2057. However, this cliff is now set to occur much sooner than that. As of the end of fiscal year 2024, OASI and DI trust fund reserves had enough capital for 21.1 months, a significant drop from the 30.8 months that the trusts had in 2020. Current predictions for insolvency place it at late 2032.
As of April 2025, more than one-fifth of Americans — or 73.9 million people — benefit from Social Security, including 52.6 million retired workers and 7.2 million disabled workers. These benefits are funded through a 12.4% payroll tax, which is split between the employer and employee.
Many older Americans rely on Social Security in retirement — in some cases, it may be their sole source of income. In a Gallup report, 58% of retired Americans said Social Security is a “major source” of their retirement income.
If nothing is done to reform Social Security by late 2032, beneficiaries can expect a cut of up to 24% off their benefits amount, according to the Committee for a Responsible Federal Budget. Whether the U.S. government will find other sources to help fund Social Security, or decide to invest the reserves in private securities in an attempt to boost the trust funds to solvency, is unclear as of early 2026. However, Congress might need to contend with broken promises if it hopes to prevent the Social Security crisis on the horizon.
