The Social Security trust fund that pays retirement and survivor benefits is now expected to run dry in the fourth quarter of 2032. That’s one quarter earlier than last year’s projection, a shift driven largely by revenue losses baked into the 2025 budget reconciliation law.

When the money runs out, retirees won’t get nothing. They’ll get roughly 78 cents on the dollar. In English: an automatic, across-the-board benefit cut of about 22% for everyone collecting Social Security, with no vote required and no warning letter in the mail.

What changed and why it matters

The 2026 Social Security Trustees Report, expected around June 9, pins the acceleration on a specific culprit: changes to how Social Security benefits are taxed under the 2025 reconciliation law.

That law is projected to strip nearly $170 billion from trust fund revenue between 2025 and 2034. The mechanism is straightforward. Modifications to benefit taxation mean less money flowing back into the system, even as the number of people drawing from it keeps climbing.

Shifting immigration trends have also played a role. Fewer working-age immigrants mean fewer payroll tax contributions feeding the fund.

The Old-Age and Survivors Insurance trust fund, known as OASI, is the specific fund at issue. It’s the one that pays monthly checks to roughly 50 million retirees and their dependents. A separate fund covers disability benefits, and its outlook is somewhat different.

The $170 billion hole

The system was already running a structural deficit. It’s been paying out more in benefits than it collects in payroll taxes since 2021, drawing down its reserves to cover the gap. Once the account hits zero, beneficiaries are limited to whatever comes in that month — that’s the 78% scenario: payroll taxes alone covering what they can, and beneficiaries absorbing the rest as a cut.

The Committee for a Responsible Federal Budget, which tracks federal fiscal policy, has been among the organizations analyzing these projections alongside the Social Security Administration’s own actuaries. Their consistent message has been that delay makes the eventual fix more painful.

A 22% cut to Social Security benefits would hit hardest among retirees who depend on those checks for the majority of their income. For roughly 40% of Americans over 65, Social Security represents at least half their total income.

What this means for investors and the broader economy

Social Security payments represent one of the largest single flows of consumer spending in the US economy. A 22% reduction in those payments would directly reduce disposable income for tens of millions of households.

Sectors most exposed to that kind of spending pullback include retail, consumer staples, and healthcare services, particularly those serving older demographics.

For crypto markets specifically, the trustees report contains zero references to digital assets. Social Security remains firmly within its traditional funding framework of payroll taxes and Treasury securities.

The options for fixing Social Security’s finances haven’t changed: raise payroll taxes, reduce benefits, increase the retirement age, or some combination. A payroll tax increase would reduce corporate margins and take-home pay. Benefit cuts would suppress consumer spending. Raising the retirement age would reshape labor force participation.