The Social Security and Medicare Trustees 2026 reports, released June 9, 2026, put dates and dollar figures on the sustainability question. The Old-Age and Survivors Insurance trust fund is projected to be depleted in 2032, one year earlier than in last year's report, at which point incoming revenue would cover 78% of scheduled benefits; the combined retirement and disability funds last until 2034 with 83% payable [2][3]. Medicare's Hospital Insurance trust fund is projected to be depleted in the second quarter of 2033, with revenue covering 89% of costs [1]. The 75-year Social Security shortfall is 4.42% of taxable payroll and the Medicare Hospital Insurance shortfall is 0.56% of payroll, both larger than a year ago [3]. This note sets out the numbers behind the Social Security and Medicare Trustees 2026 reports and what closing the gaps would require.
Social Security 2026 Trustees Report: the key numbers
The retirement fund (OASI) is the pressing case. Reserves are projected to run out in the fourth quarter of 2032, and under current law benefits would then be cut automatically to what payroll and benefit taxes can support, a reduction of 22% for all current and future beneficiaries, growing to 38% by 2100 [2][3]. About 71 million people are projected to be receiving OASI benefits in 2032 [2]. The disability fund (DI) is solvent throughout the 75-year window; if lawmakers combined the two funds, the combined program would last until 2034 with a 17% cut at that point [2][3].
| Program | Projected depletion | Benefits payable at depletion | 75-year actuarial deficit (% of taxable payroll) |
|---|---|---|---|
| Social Security retirement (OASI) | Q4 2032 | 78% | 4.55% |
| Social Security combined (OASDI) | 2034 | 83% | 4.42% |
| Social Security disability (DI) | Not depleted within 75 years | 100% | surplus of 0.13% |
| Medicare Hospital Insurance (HI) | Q2 2033 | 89% | 0.56% |
Sources: 2026 Medicare Trustees Report [1]; American Action Forum and Committee for a Responsible Federal Budget summaries of the 2026 Social Security Trustees Report [2][3].
Why the outlook worsened
The combined actuarial deficit rose to 4.42% of payroll from 3.82% in the 2025 report, a 16% increase in one year [3]. The unfunded obligation for the combined program over 75 years is $29.3 trillion in present value [2]. In 2025 the retirement program took in about $1.2 trillion and paid out about $1.4 trillion, a cash shortfall that was covered by redeeming trust fund securities, which in turn had to be financed by Treasury borrowing [2]. Part of the deterioration came from 2025 tax legislation that reduced income tax paid on benefits, which lowers the revenue flowing to the trust funds [1].
Medicare 2026 Trustees Report: the hospital fund and beyond
Medicare covered an estimated 69.3 million people in 2025, 62.2 million aged 65 and older and 7.1 million with disabilities, and about 51% chose private Part C plans [1]. Total Medicare expenditures were $1,210.1 billion in 2025 against income of $1,226.2 billion [1]. The Hospital Insurance fund had income of $462.4 billion, $18.2 billion more than its expenditures, and held $255.7 billion of assets at the start of 2026, equal to about 53% of one year's costs [1]. The Trustees project that HI tax and other non interest income will fall short of expenditures beginning in 2027, and that reserves will be depleted in the second quarter of 2033, one quarter earlier than projected last year [1].
The Supplementary Medical Insurance side (Parts B and D) cannot become insolvent because general revenue and premiums are reset each year to cover costs, but that is the problem: Part B spending is projected to grow 8.5% a year and Part D 9.4% a year from 2026 to 2030, against 4.0% growth in GDP [1]. Total Medicare spending is projected to rise from 3.9% of GDP in 2025 to 6.5% in 2050 and about 7.5% in 2100 under current law, or 9.8% under the Trustees' illustrative alternative if scheduled payment restraints are not sustained [1].
The Medicare funding warning
- The Trustees again issued a Medicare funding warning because general revenue is projected to exceed 45% of total Medicare outlays in fiscal 2026 [1].
- Closing the 75-year HI gap would require raising the HI payroll tax from 2.90% to 3.46% starting in 2026, or cutting scheduled HI benefits by 12.0% [1].
- The 75-year unfunded obligation for HI is $4.2 trillion in present value, or 0.2% of GDP [1].
How large the programs are in today's budget
The scale is visible in current spending. Through June of fiscal 2026 the Treasury recorded $1,243.8 billion of Social Security outlays and $780.3 billion of Medicare outlays, together $2,024.1 billion, or about 37% of total federal outlays of $5,517.9 billion [4]. Both grew faster than total spending: Social Security rose 5.3% and Medicare 7.9% from the same period a year earlier, versus 3.2% for all outlays [4]. Nominal GDP was $32.5 trillion at an annual rate in the second quarter of 2026 according to DataPorium's economic metrics, so the two programs are running near 8% of GDP on a nine month annualized basis [5].
What closing the gap would take
The Trustees' arithmetic is stark. To make the combined Social Security program solvent for 75 years through payroll taxes alone would require raising the combined rate from 12.4% to about 17.3%, an increase of 40%; for the retirement fund on its own the rate would need to rise from 10.6% to 16.1% [2]. On the benefit side, the automatic cut at depletion is 22% for retirees in 2032 [3]. Waiting makes every option larger: as the Medicare report notes, if action is deferred until depletion, larger changes are concentrated on fewer years and fewer generations [1].
From a market oriented and fiscally conservative perspective, three points follow. First, the programs' shortfalls are a claim on future general revenue and therefore on future borrowing, which adds to the interest costs already crowding the budget. Second, the most growth friendly fixes are those that raise labor force participation, retirement ages in line with longevity, and productivity, because payroll tax revenue rises with real wages; higher payroll tax rates, by contrast, tax work directly. Third, personal saving matters more than ever: a 22% benefit reduction in 2032 is the current law baseline, and households that plan around it are less exposed than those that assume scheduled benefits.
The fair counterpoint is that a shortfall of 4.42% of payroll, or about 1.5% of GDP, is large but manageable for a $32 trillion economy. Investors may consider that the 2032 and 2033 dates now fall within the horizon of most long term bonds, which raises the likelihood of legislative action and, with it, uncertainty about tax rates, benefit formulas and Treasury issuance.
By current law the retirement trust fund is exhausted in 2032 and benefits fall 22%, the Medicare hospital fund is exhausted in 2033 and pays 89 cents on the dollar, and each year of delay makes the eventual tax increase or benefit change larger.
Key takeaways
- The OASI trust fund is projected to be depleted in Q4 2032 with 78% of benefits payable, one year earlier than in the 2025 report; combined OASDI lasts until 2034 with 83% payable [2][3].
- The 75-year Social Security actuarial deficit rose to 4.42% of payroll from 3.82%, and the unfunded obligation is $29.3 trillion [2][3].
- Medicare HI is projected to be depleted in Q2 2033 paying 89% of costs; its 75-year deficit is 0.56% of payroll, up from 0.42% [1].
- Medicare spending is projected to rise from 3.9% of GDP in 2025 to 6.5% in 2050; Parts B and D are growing 8.5% and 9.4% a year against 4.0% GDP growth [1].
- Social Security and Medicare outlays were $2,024 billion through June of fiscal 2026, about 37% of all federal spending [4].
Frequently asked questions
When will the Social Security trust fund run out according to the 2026 report?
The retirement (OASI) trust fund is projected to be depleted in the fourth quarter of 2032, after which 78% of scheduled benefits could be paid; the combined retirement and disability funds would last until 2034 with 83% payable [2][3].
How much would Social Security benefits be cut in 2032?
Under current law, benefits would be reduced by 22% for all beneficiaries when the OASI fund is depleted in 2032, with the reduction growing to 38% by 2100 if nothing changes [3].
When is the Medicare Hospital Insurance trust fund projected to be depleted?
In the second quarter of 2033, one quarter earlier than in the 2025 report; at that point revenue would cover 89% of scheduled Part A costs, rising to 93% by 2100 [1].
What would it take to make Social Security solvent for 75 years?
The 2026 report implies a combined payroll tax increase from 12.4% to about 17.3%, or benefit reductions of similar scale, or a mix; the 75-year shortfall is 4.42% of taxable payroll [2][3].
Sources & References
- [1] Centers for Medicare and Medicaid Services: 2026 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds
- [2] American Action Forum: Highlights of the 2026 Social Security and Medicare Trustees Reports
- [3] Committee for a Responsible Federal Budget: Social Security and Medicare Trustees Release 2026 Reports
- [4] U.S. Treasury: Monthly Treasury Statement, June 2026
- [5] DataPorium Economic Indicators and Macro Data
