In their 2018 report, the trustees project that, under their intermediate assumptions and under current law, the Federal Disability Insurance (DI) Trust Fund will become depleted in 2032 and the Federal Old-Age and Survivors Insurance (OASI) Trust Fund will do so in 2034. Although the two funds are legally separate, they are often described in combination. Although benefits would be paid in some form, it is unclear how the necessary reductions would be implemented, because the Social Security Act does not specify what would happen to benefits if a trust fund became insolvent. One option would be to pay full benefits on a delayed schedule; another would be to make timely but reduced payments. The Social Security Trust Funds

		How the Trust Funds Work8

Social Security's receipts and expenditures are accounted for through two legally distinct federal trust funds: the OASI trust fund and the DI trust fund. 98-21 ) increased Social Security income and reduced spending. Considered on a hypothetical combined basis, the trust funds would become insolvent in 2034. The trustees project that, under their intermediate assumptions, tax income would be sufficient to cover about 79% of scheduled benefits following insolvency of the combined trust funds in 2034, declining to 74% in 2092. Another law, the Antideficiency Act, prohibits government spending in excess of available funds. Consequently, if the Social Security trust funds become insolvent—that is, if current tax receipts and accumulated assets are not sufficient to pay the benefits to which people are entitled—the law effectively prohibits full Social Security benefits from being paid on time. Legal Entitlement to Social Security Benefits

The Social Security Act states that every individual who meets program eligibility requirements is entitled to benefits. If the federal government fails to pay the benefits stipulated by law, beneficiaries could take legal action. The authorized limit in law for Social Security benefits is the balance of the trust fund. At that point, no benefits could be paid until more tax receipts were credited to the trust funds. For example, Congress could decrease Social Security benefits. If changes were made sooner, they could be smaller, since the burden of lower benefits or higher taxes would be shared by more beneficiaries or workers over a longer period. Size of Payroll Tax Rate Increases

The trustees project that paying scheduled benefits after depletion in 2034 would require an increase in the combined employee and employer payroll tax rate of 3.3 percentage points, from the current 12.4% to 15.7%, after insolvency in 2034. The sooner changes are made to the program, the smaller and less abrupt the changes would need to be to maintain solvency.
Social Security's receipts and expenditures are accounted for through two federal trust funds: the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and the Federal Disability Insurance (DI) Trust Fund. Under their intermediate assumptions and under current law, the Social Security trustees project that the DI trust fund will become depleted in 2032 and the OASI trust fund will become depleted in 2034. Although the two funds are legally separate, they are often considered in combination. The trustees project that the combined Social Security trust funds will become depleted in 2034. At that point, the combined trust funds would become insolvent, because incoming tax revenue would be sufficient to pay only about 79% of scheduled benefits.
If a trust fund became depleted and current receipts were insufficient to cover current expenditures, there would be a conflict between two federal laws. Under the Social Security Act, beneficiaries would still be legally entitled to their full scheduled benefits. However, the Antideficiency Act prohibits government spending in excess of available funds, so the Social Security Administration (SSA) would not have legal authority to pay full Social Security benefits on time.
It is unclear what specific actions SSA would take if a trust fund were insolvent. After depletion, the trust funds would continue to receive tax revenues, from which a majority of scheduled benefits could be paid. One option would be to pay full benefits on a delayed schedule; another would be to make timely but reduced payments. Social Security beneficiaries would remain legally entitled to full, timely benefits and could take legal action to claim the balance of their benefits.
Maintaining financial balance after trust fund insolvency would require substantial reductions in Social Security benefits, substantial increases in tax revenues, or some combination of the two. The trustees project that following depletion of the combined funds in 2034, Congress could restore balance by reducing scheduled benefits by about 21%; the required reduction would grow gradually to 26% by 2092. Alternatively, Congress could raise the Social Security payroll tax rate from 12.4% to 15.7% following depletion in 2034, then gradually increase it to 16.7% by 2092.
Trust-fund insolvency could be avoided if expenditures were reduced or receipts increased sufficiently. The sooner Congress acts to adjust Social Security policy, the less abrupt the changes would need to be, because they could be spread over a longer period and would therefore affect a larger number of workers and beneficiaries. Even if changes were not implemented immediately, enacting them sooner would give workers and beneficiaries more time to plan and adjust their work and savings behavior.