Social Security trust fund to run dry by 2032, CBO says in new projections

Rising pressure on Social Security and major health programs is set to drive federal spending higher over the next decade, even as US deficits and debt climb to levels without modern precedent.

That's according to a new 10-year outlook from the Congressional Budget Office released Wednesday, which projects increases in spending for Social Security and Medicare, combined with rising net interest costs, would push outlays to $11.4 trillion in 2036.

For retirement-focused clients, the most immediate marker is the Old-Age and Survivors Insurance trust fund, which CBO now expects to be exhausted in 2032 – one year sooner than it projected last January. Under current law, that would trigger automatic benefit cuts if Congress does not act, adding a layer of uncertainty for advisors building long-term income plans.

Read more: Social Security trustees see one less year in insolvency countdown, projects shortfalls starting 2034

Spending on Social Security and Medicare is a central reason federal outlays rise from 23.3% of gross domestic product in 2026 to 24.4% in 2036, CBO said. While discretionary programs shrink as a share of the economy, mandatory benefits and net interest payments continue to expand.

Phill Swagel, director of the budget office, said the new projections reflect three main forces that have reshaped the baseline since early 2025: the 2025 reconciliation act (Public Law 119-21), higher tariffs, and lower immigration. Those policy and economic shifts are layered on top of long-running demographic trends that are pushing the retirement system and health programs to absorb a larger share of federal resources.

By 2036, the annual deficit is projected to reach $3.1 trillion, or 6.7% of GDP, up from a $1.9 trillion shortfall in 2026. Swagel noted that such “sustained large deficits are historically unusual, given that the unemployment rate is projected to remain below 5 percent.”

Going by the CBO analysis, net interest payments alone are set to rise from $1 trillion in 2026 to $2.1 trillion in 2036, moving from 3.3% to 4.6% of GDP.

Federal debt held by the public is on track to grow from 99% of GDP at the end of 2025 to 120% in 2036; even before that, by 2030, debt as a share of GDP will have surpassed the prior postwar peak of 106% in 1946. Over CBO’s 30-year horizon, the US will see debt-to-GDP ratio hit 175%, assuming nothing is done and current laws stay in place.

“Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” Swagel said bluntly.

Reacting to the analysis, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called out what she sees as continuing failures in fiscal prudence, with America's debt binge set to accelerate from borrowing $2 trillion annually to $3 trillion within a decade.

“There are no surprises here or bright spots of encouraging news: our nation’s deficits, debt, interest payments and trust funds are all in terrible shape," MacGuineas said in a Wednesday statement. "With debt around 100% of GDP and growing, we will enter the next crisis with a higher debt-to-GDP ratio than we ever have had before."

Given current challenges from an aging society to growing geopolitical tensions, she said the country's debt is "a self-imposed disadvantage," and called on legislators to work together on a fix.

"Fiscal leadership is not easy – it requires committing to not making the situation worse by withholding support for new legislation that is debt financed, focusing on actual solutions rather than casting blame, and being willing to make tough policy choices that will be the centerpiece of any serious debt deal," MacGuineas said.