Social Security cost about $1.48 trillion per year as of 2024, according to the 2025 Trustees Report, making it the single largest program in the federal budget.1Social Security Administration. Social Security Board of Trustees: Projection for Combined Trust Funds One Year Sooner than Last Year That figure equals roughly 5 percent of U.S. gross domestic product and about a fifth of all federal spending. The SSA projects total benefits paid in 2025 will reach around $1.6 trillion.2Social Security Administration. Fact Sheet Social Security
The cost is driven mostly by how many people receive checks. About 70.8 million people collected Social Security benefits each month as of February 2026, and that number keeps rising as roughly 10,000 Americans turn 65 every day.3Social Security Administration. Monthly Statistical Snapshot
Where the Money Goes
Nearly all of the annual cost flows through two dedicated trust funds. The Old-Age and Survivors Insurance fund pays retirees, surviving spouses, children of deceased workers, and certain dependent parents. OASI expenditures totaled $1.327 trillion in 2024.4Social Security Administration. 2025 OASDI Trustees Report – Section: OASI Trust Fund
The Disability Insurance fund covers workers who develop a qualifying medical condition before retirement age. DI spending came to $157.6 billion in 2024, a much smaller figure that reflects both a smaller eligible population and a high bar for qualifying.5Social Security Administration. A Summary of the 2025 Annual Reports
The typical check is modest. The average retired worker received about $2,071 per month as of January 2026, or roughly $24,850 a year.6Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet Multiply that by tens of millions of recipients and you get to the trillion-dollar scale.
Why the Annual Cost Keeps Rising
Two forces push the number up every year: more beneficiaries, and cost-of-living adjustments that permanently raise each check.
The 2026 COLA was 2.8 percent, applied to nearly 71 million beneficiaries starting in January.7Social Security Administration. Cost-of-Living Adjustment (COLA) Information A 2.8 percent bump on a $1.48 trillion base adds tens of billions to annual spending, and it compounds. Future COLAs stack on top of the higher amount. There is no mechanism to reverse a COLA once it takes effect.
Recent adjustments have been unusually large. The 2023 COLA of 8.7 percent was the biggest in four decades, and the more modest 2024 and 2025 adjustments (3.2 percent and 2.5 percent) layered on top of that high-water mark. Average benefit amounts have grown significantly in just a few years, and total program cost has grown with them.
How the Program Is Funded
Social Security does not draw from general income taxes. Every benefit dollar must come out of the trust funds, which have three revenue streams.
Payroll Taxes
The largest source is the payroll tax under the Federal Insurance Contributions Act. Employees pay 6.2 percent of their wages, and employers match that with another 6.2 percent.8Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax Self-employed workers pay the full 12.4 percent themselves, though they can deduct half of that on their income tax return.9Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
The tax only applies up to a cap. For 2026, the taxable maximum is $184,500, so wages above that amount are not subject to Social Security tax.10Social Security Administration. Contribution and Benefit Base An employee earning $500,000 pays the same Social Security tax as one earning $184,500.
Taxation of Benefits
Higher-income retirees pay federal income tax on part of their benefits, and that revenue flows back into the trust funds. Up to 85 percent of your benefits can be taxable if your combined income exceeds $25,000 as a single filer or $32,000 filing jointly.11Social Security Administration. Must I Pay Taxes on Social Security Benefits Those thresholds have never been indexed for inflation since they were set in 1983 and 1993, so more retirees fall into taxable territory each year.
Interest on Trust Fund Reserves
The trust funds invest their reserves in special-issue U.S. Treasury securities.12Social Security Administration. Frequently Asked Questions About the Social Security Trust Funds Interest on those securities provided about $69 billion in 2024. As the reserves shrink, so does this income.
Administrative Costs Are a Small Slice
Running the program for over 70 million monthly recipients is comparatively cheap. Administrative expenses totaled $7.4 billion in 2024, and they have stayed at 1 percent or less of combined trust fund spending since 1989.13Social Security Administration. Social Security Administrative Expenses The SSA’s FY 2026 budget request is $14.8 billion, which is broader than trust fund overhead because it also covers programs like Supplemental Security Income.14Social Security Administration. FY 2026 President’s Budget
Costs Now Exceed Income
Social Security has been spending more than it takes in since 2021. Total income to the combined trust funds was $1.418 trillion in 2024, against costs of $1.48 trillion — a shortfall of roughly $67 billion covered by drawing down accumulated reserves.1Social Security Administration. Social Security Board of Trustees: Projection for Combined Trust Funds One Year Sooner than Last Year
Those reserves are finite. The 2025 Trustees Report projects the combined OASI and DI trust funds will be fully depleted by 2034, one year sooner than the prior estimate.5Social Security Administration. A Summary of the 2025 Annual Reports
Depletion is not the same as bankruptcy. Payroll taxes would still flow in and would cover about 81 percent of scheduled benefits starting in 2034, which would translate to an automatic benefit cut of roughly 19 percent across the board unless Congress acts. For someone receiving the current average retirement check of $2,071 a month, a 19 percent cut would remove nearly $400 a month. The options for closing the gap include raising the payroll tax rate, lifting or eliminating the taxable maximum, adjusting the retirement age, or changing the benefit formula. No legislation had advanced as of mid-2025.