2026 Social Security Report

 The 2026 Social Security Trustees Report was recently released.  First, look at the magic words:

The combined trust funds’ reserves were about $2.56 trillion at the end of 2025. The combined trust fund reserves decline on a present value basis after 2025 but remain positive through 2033. However, this cumulative amount becomes negative beginning in 2034, which means that the combined OASI and DI Trust Funds have a net unfunded obligation through the end of each year after 2033. Through the end of 2100, the combined funds have a present-value unfunded obligation of $29.3 trillion.

Expressed in present-value dollars discounted to January 1, 2026, the 75-year open-group unfunded obligation for OASDI is $29.3 trillion, or 1.5 percent of GDP over the years 2026-2100. In last year’s report, the unfunded obligation was $25.1 trillion, or 1.3 percent of GDP over the years 2025-99.

So the funds become depleted in 2034, the same as in last years report.  The 75 year unfunded obligation increased from $25.1 trillion to $29.3 trillion, an increase of $4.2 trillion, which is not good at all.  In 2024 this number was $22.6 trillion.

Now, what is the expected GDP in 2070 under intermediate assumptions?

In the 2024 report, the expected GDP in 2070 is 176,496.

In the 2025 report, the expected GDP in 2070 is 176,236.

In this 2026 report, the expected GDP in 2070 is 168,283.  (This was very hard to find - it is on page 223 of the pdf).

I don't know why expected GDP is less than before but this is not good.

What happens when the trust fund depletes?  I keep changing my mind on this.  In the past I believe that we could assume that Social Security would continue to be paid out of general funds.  But now, I think that Social Security benefits will be cut about 20-25% and this will cause a breakdown and fiscal crisis because of the contradiction.  (Social Security MUST be cut!  Social Security CAN'T be cut!).

I am not going to update my forecast of a breaking point and possible financial crisis which is currently set for 2048, but I think it will happen before that.