What 78 Cents on the Dollar Means for Your Social Security Plan

Stocks rose even as the 10-year Treasury yield hit its highest level since 2007. The Dow snapped a three-week slide.

The quick scan: All three indexes finished higher on Friday, closing a volatile week in which the bond market did most of the talking. Stocks took a 10-year yield at its highest since 2007 in stride, as oil eased on reports of US-Iran talks over a phased deal to reopen the Strait of Hormuz. The Dow snapped a three-week losing streak, and the S&P 500 and Nasdaq notched weekly gains.

S&P 500: +0.51% to 7,743.41 – opened slightly higher and extended gains into the close; a weekly win despite the bond sell-off
Dow Jones: +0.93% to 51,828.62 – added 478.64 points and snapped a three-week losing streak; bank stocks clawed back some of their losses from earlier in the week
NASDAQ: +0.48% to 27,068.72 – a weekly gain; Meta gave back some of its sharp rally on its new Muse AI agent but stayed well up for the week

What's driving it: The 10-year Treasury yield touched its highest level since 2007 on Friday, with CNBC reporting an intraday high of 5.23%. The drivers cited were high energy prices from the Iran war, strong economic data and Fed rate hikes. Mortgage rates followed, with the average 30-year fixed rate reaching 7.49% according to Mortgage News Daily. The University of Michigan's final September consumer sentiment reading fell to 48.1, a four-month low, while one-year inflation expectations rose to 4.6%. Oil fell on reports that US and Iranian negotiators are discussing a phased deal to reopen the Strait of Hormuz, which gave stocks room to rise. The Trump-Xi talks ended with plans for an AI summit in Shenzhen in November, but little on trade.

Bottom line: A good day for stocks does not cancel a loud week for bonds. Yields at their highest since 2007 and consumers expecting 4.6% inflation are reminders that the assumptions behind any retirement plan can shift quickly. Today's article makes the same point about Social Security: this year's Trustees Report moved the retirement fund's (OASI) depletion date to late 2032 because the assumptions changed. For L-Plate Retirees, the lesson from both is the same – plan for a range, not a single number.

The Retirement Trust Fund Runs Low in 2032. The Checks Don't Stop. So What Changes?

The scoop: Seventy-eight cents. That is roughly what Social Security's retirement trust fund could pay on every dollar of scheduled benefits once its reserves run out in the fourth quarter of 2032, according to this year's Trustees Report, published in June.

It is the kind of number that becomes a frightening headline quickly, and it deserves a slower read. ASPPA's summary of the 2026 Trustees Report is a useful place to start, because it separates two dates that often get blurred together.

Two dates, not one

Social Security is really two trust funds sharing a name. The retirement fund, known as OASI, pays retirement benefits; the disability fund pays disability benefits.

The retirement fund, OASI, can pay 100% of scheduled benefits until the fourth quarter of 2032. That is one quarter earlier than last year's projection. After that, the money still coming in would cover about 78% of scheduled benefits.

The combined figure, OASDI, which adds the retirement and disability funds together, lasts until the third quarter of 2034, unchanged from last year. After that, continuing income would cover 83%.

The disability fund on its own is in far better shape. The Trustees project it stays solvent through at least 2100.

So which date matters? ASPPA makes a point that is easy to skate past: the combined OASDI figure is hypothetical. The two funds cannot legally be merged without a change in the law. For anyone drawing a retirement benefit, the OASI date of late 2032, with 78% payable, is the closer reference point. The OASDI date of 2034, with 83% payable, describes an arrangement that does not currently exist.

That distinction is not pedantry. It is five percentage points of benefit and well over a year of runway.

What "running out" actually means

When a trust fund's reserves are depleted, the program does not stop. Workers keep paying payroll taxes, and that income keeps flowing. The Trustees' own figures say it would cover 78% of scheduled retirement benefits once the OASI fund is depleted in late 2032.

A 22% reduction would be painful. But it is very different from zero. Think of a household that has been topping up its monthly spending from savings for years. When the savings are gone, the salary does not vanish. The household simply has to live on the salary alone. That is Social Security's position.

The savings account has been shrinking for a while

Social Security paid out $1.6 trillion to 70 million beneficiaries last year. About 185 million workers paid payroll taxes into the system. Total cost exceeded total income by $160 billion. Reserves fell from $2.7 trillion to $2.56 trillion.

This is not new. According to the report, the program's cost has exceeded its non-interest income every year since 2010. The reserves have been doing the topping up for over a decade.

The Trustees also measure the long-range gap. Over the next 75 years, the actuarial deficit is now 4.42% of taxable payroll, up from 3.82% last year. In ordinary language, the hole got deeper this year, not shallower.

Why the date moved

The Trustees name three drivers.

The first is babies. The assumed long-run fertility rate was cut from 1.90 to 1.75. Fewer children today means fewer workers paying payroll taxes a few decades from now.

The second is immigration. The report assumes lower immigration, which also means fewer workers contributing.

The third is tax law. Tax changes enacted on 4 July 2025 reduce the income tax collected on benefits, and that tax flows to the trust funds. Less tax collected means less money arriving.

These are assumptions and arithmetic, not judgements, and the Trustees revisit them every year. Next year's report may move the date again, in either direction.

Medicare is on a similar clock

The same report covers Medicare's Hospital Insurance fund, Part A. It is projected to pay full benefits until the second quarter of 2033, after which continuing income would cover 89% of scheduled benefits. That is a later date and a higher percentage than the retirement fund, but the principle is identical: depletion means a reduced payment from continuing income, not no payment at all.

For many US retirees, Medicare and Social Security are two halves of the same budget.

What this means for the plan on your kitchen table

If you are a US worker, a US retiree, or someone with enough US work history to qualify for benefits, the practical question is not "will Social Security exist?" It will keep paying. The better question is "how much of my plan leans on the full scheduled amount, and what happens if it does not arrive?"

Someone who is 65 today would be 71 or 72 when the OASI fund reaches its projected depletion in late 2032. That sits squarely inside most retirement plans being drawn up now.

At the same time, a projected date is not a verdict. What changes lawmakers make, and when, is something this report cannot tell us. Planning for a range is the sensible middle path.

Sooner rather than later

The Trustees closed with a line that works just as well at home: "Taking action sooner rather than later will allow consideration of a broader range of solutions."

For a household, it means much the same thing as for lawmakers. A plan tested today against a smaller benefit has years of room to adjust. A plan that discovers the gap when the OASI fund is depleted in late 2032 has very little.

Seventy-eight cents is not nothing. It is also not the whole dollar. The useful work happens in the space between the two.

Actionable takeaways for L-Plate Retirees:

• Know which date is yours. The retirement fund, OASI, is projected to pay full scheduled benefits until the fourth quarter of 2032, then about 78%. The combined OASDI date of the third quarter of 2034, then 83%, is hypothetical, because the two funds cannot legally be merged without a change in the law. For a retirement benefit, anchor on the OASI date.

• Test your plan at 78%, not at zero. Neither "it will all disappear" nor "nothing will change" is a planning assumption. Run your income plan once with the full scheduled benefit, and once with 78% of it from the OASI date in late 2032. If the second version still works, the headline loses most of its grip on you. If it does not, you have found the gap early.

• Read the report as a range, not a prophecy. The OASI date moved one quarter this year because the Trustees changed their assumptions on fertility, immigration and tax. It can move again. The 75-year deficit also widened, from 3.82% to 4.42% of taxable payroll. Revisit your numbers with each new Trustees Report, not each headline.

• Watch Medicare alongside Social Security. Medicare's Part A fund is projected to pay full benefits until the second quarter of 2033, then 89%. If your retirement budget counts on both programmes, keep an eye on both, and apply the same reduced-payment test to healthcare costs.

• Be wary of anyone using this report to sell urgency. If a sales pitch opens with "Social Security is running out", the framing is doing the selling, not the Trustees.

• Do not let a headline make your claiming decision. When to start benefits depends on your own circumstances, other income and household. A projected date on its own is not a reason to rush. A qualified adviser can help with the numbers. This is not financial advice.

Your Turn: 
If your retirement benefit arrived at 78% of the scheduled amount from the OASI date in late 2032, which part of your budget would feel it first?
Does knowing that the combined OASDI figure is hypothetical change how you read the 2034 date you may have seen in the headlines?
The Trustees say acting sooner allows a broader range of solutions, so what is one adjustment you could test in your own plan this year?

👉 Hit reply and share your thoughts – your answers could inspire fellow readers in future issues.

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