Social Security benefits could be cut 22% in 2032—and one fix would mean a 40% payroll tax hike for millennials and Gen Z
Retirees are getting a 3.6% raise in 2027, but the program’s main trust fund is set to run dry in less than seven years.
Social Security's main trust fund will run out of money in 2032, potentially cutting benefits by 22%. The Social Security Administration (SSA) recently announced a 3.6% cost-of-living adjustment (COLA) for 2027, raising monthly payments by an average of $75 to $2,170. The increase will affect about 76 million Americans, including nearly 7.3 million people receiving Supplemental Security Income (SSI).
The program, primarily financed through a 12.4% payroll tax, faces a significant funding shortfall, with the OASI Trust Fund projected to run out in Q4 2032 and OASDI Trust Funds in Q3 2034. Without changes, incoming revenue would cover only 78% of scheduled benefits by 2032, dropping to 62% by 2100. Some experts propose raising payroll taxes, which could require a 40% increase from the current 12.4% to 17.3% in 2034, to maintain benefits without cuts.
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