That\u2019s one year sooner than what was projected<\/a> in a 2025 analysis by the Social Security Board of Trustees.<\/p>\n \u201cSocial Security is not crashing to the ground, but it is heading for a pothole,\u201d said Nick St. George, owner of North Carolina-based St. George Wealth Management.<\/p>\n With the trust fund running out in just a few years, it\u2019s important for retirees<\/a> to know why the money is disappearing and what they need to do about it.<\/p>\n open image in gallery<\/p>\n Retirees may have to recalculate their retirement plan, as Social Security payments could be lowered when a key trust fund runs out in 2032 (Getty Images)<\/p>\n Why the money is running out?<\/p>\n Social Security<\/a>\u2019s original design when it launched in 1940 was to take a cut of the workforce\u2019s pay – 7.2 percent between employers and employees – to pay out benefits<\/a> to those who were of retirement age.<\/p>\n The concept worked well when enough workers were paying into the system to cover the cost of the benefits received by the nation\u2019s retirees. In 1960, for example, there were five working-age people for every one retiree, St. George said. But now? It\u2019s a much different picture. <\/p>\n \u201cToday that number is more like 2 or 3,\u201d he said. \u201cFewer workers means fewer contributors to the system to support each beneficiary.\u201d <\/p>\n Additionally, people are living longer, which means they\u2019re receiving Social Security benefits for longer periods of time. <\/p>\n \u201cOne of the most significant changes is that there are more retirees and people are living longer,\u201d St. George said. \u201cThe huge wave of Baby Boomers has become a reality, and a lot of people are earning a paycheck for more years in retirement.\u201d<\/p>\n As a result, the money coming into Social Security isn\u2019t covering what\u2019s going out, and the government he Old-Age and Survivors Insurance trust fund has to cover the gap. <\/p>\n \u201cWhen the [funding] balance is not sufficient to pay full monthly benefits, Social Security then draws money from the trust fund, much like a household savings account would be drawn upon when the monthly income is not sufficient to cover all of the needed expenses,\u201d St. George said.<\/p>\n What it means for retirees<\/p>\n While the federal projection isn\u2019t doom for retirees\u2019 Social Security, St. George pointed out, it could very well have an impact on how much their monthly benefits are. <\/p>\n Without the fund, the government would cover the cost of payments with its Social Security tax revenue. However, because that revenue isn\u2019t sufficient to pay retirees, adjustments will need to be made.<\/p>\n \u201cIf the [trust] fund runs out, benefits would have to decrease to match incoming revenue from payroll taxes,\u201d Beca Life Settlements CEO Yehuda Tropper told The Independent in an email.<\/p>\n open image in gallery<\/p>\n Those retiring in the next few years will have to wade through a murky situation, as their payments could be reduced after key federal funds run out (Getty Images)<\/p>\n How much would the pay cut be? Around 20 percent to 25 percent, St. George said. <\/p>\n So, if a retiree is earning $3,000 a month, their payment could drop to as low as $2,250, he said. <\/p>\n Start planning now<\/p>\n The government can make changes to the trust fund so it lasts longer, but that would include controversial decisions like raising the retirement age, raising the payroll taxes that fund Social Security or modifying the formula the government uses to calculate a retiree\u2019s monthly payment, Tropper said. <\/p>\n Raising the retirement age, raising tax or both would likely be unpopular moves, St. George said. \u201cThe numbers aren\u2019t hard to calculate,\u201d he said. \u201cThe politics are.\u201d<\/p>\n![\"Retirees](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/03\/GettyImages-77611461.jpg\")
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