Social Security spent roughly $1.4 trillion in calendar year 2023, making the Social Security annual budget the single largest line in federal spending. The money is classified as mandatory, so Congress does not vote each year on whether to send benefit checks. If you meet the eligibility rules written into federal law, payment is owed. Revenue comes mostly from payroll taxes, with smaller amounts from interest on Treasury securities held by the trust funds and from income taxes that higher-income beneficiaries pay on their benefits.
Where the Money Comes From
Payroll taxes do the heavy lifting. Federal law imposes a 6.2% tax on wages for Old-Age, Survivors, and Disability Insurance, and employers match that 6.2%, for a combined 12.4% on every paycheck.1Office of the Law Revision Counsel. 26 U.S.C. 3101 – Rate of Tax The tax applies only up to a cap that adjusts with average wages. For 2026, that cap is $184,500, and earnings above it are not taxed for Social Security.2Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security? Self-employed workers pay both halves themselves, a full 12.4% of net self-employment income.3Office of the Law Revision Counsel. 26 U.S.C. 1401 – Rate of Tax
When collections have exceeded what the program needed for current benefits, the surplus was invested in special-issue Treasury securities that earn interest at a rate pegged to the average market yield on marketable Treasury bonds with four or more years to maturity.4Social Security Administration. Frequently Asked Questions About the Social Security Trust Funds In 2023, trust fund interest income totaled about $67 billion.
The third stream is income tax on benefits. If your combined income as a single filer exceeds $25,000, or $32,000 on a joint return, up to 50% of your benefits become taxable. Above $34,000 for singles and $44,000 for joint filers, up to 85% of benefits are taxable.5Office of the Law Revision Counsel. 26 U.S.C. 86 – Social Security and Tier 1 Railroad Retirement Benefits Those thresholds have never been adjusted for inflation, so more beneficiaries cross them every year. The revenue flows back into the trust funds.6Social Security Administration. Must I Pay Taxes on Social Security Benefits?
Where the Money Goes
Nearly all program spending goes directly to beneficiaries. Social Security pays over 70 million people through two trust funds: Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI). Combined benefit payments totaled about $1.39 trillion in calendar year 2023.7Social Security Administration. Fast Facts and Figures About Social Security
The split by beneficiary group:
- About 79% of benefits go to retired workers, their spouses, and their children. Your monthly amount depends on your lifetime earnings and the age you start collecting. For 2026, the maximum monthly benefit for someone retiring at full retirement age is $4,152, though qualifying for that requires 35 years of earnings at or above the taxable maximum. The average monthly retirement benefit is $2,071.8Social Security Administration. Annual Statistical Supplement, 2024 – Highlights and Trends9Social Security Administration. What Is the Maximum Social Security Retirement Benefit Payable?10Social Security Administration. What Is the Average Monthly Benefit for a Retired Worker?
- About 9% goes to widows, widowers, and dependent children of workers who have died.8Social Security Administration. Annual Statistical Supplement, 2024 – Highlights and Trends
- About 13% goes to workers with long-term medical conditions that prevent them from working, along with their spouses and children. The average disabled worker’s monthly benefit for 2026 is $1,630.11Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
How the Annual COLA Changes the Budget
Benefits are not fixed at the amount you first receive. Each year, the Social Security Administration calculates a cost-of-living adjustment (COLA) by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the current year against the third quarter of the previous year.12Social Security Administration. Latest Cost-of-Living Adjustment If prices rose, benefits go up by that percentage. If prices fell or stayed flat, benefits stay the same. They never decrease due to COLA.
For 2026, the COLA is 2.8%, which works out to roughly $56 more per month for the average retired worker.11Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet The COLA automatically raises total program spending each year without any vote in Congress. In high-inflation years the effect is large. The COLA hit 8.7% in 2023.
Administrative Overhead
Overhead is small relative to benefit spending. Administrative expenses charged to the trust funds have held at about 0.5% of total expenditures in recent years.13Social Security Administration. Social Security Administrative Expenses In dollar terms, the trust funds bore roughly $7.4 billion in administrative costs during 2024, covering claim processing, maintenance of earnings records for nearly every worker in the country, and staffing at hundreds of field offices.
The agency’s total administrative budget is larger than that figure because the Social Security Administration also runs Supplemental Security Income (SSI), which is funded from general tax revenue rather than payroll taxes, and performs certain functions for Medicare. The combined administrative budget request for fiscal year 2026 is approximately $14.8 billion, drawing on trust fund dollars, general revenue for SSI, and Medicare reimbursements.14Social Security Administration. FY 2026 Limitation on Administrative Expenses Figures in the $14–15 billion range refer to this combined total, not the trust fund share alone.
Trust Fund Balances and Current Cash Flow
The trust funds are not vaults of cash. They are accounting ledgers tracking what the program has accumulated from decades of payroll taxes, interest, and benefit taxation, minus everything paid out. Past surpluses were converted into special-issue Treasury securities backed by the full faith and credit of the federal government.4Social Security Administration. Frequently Asked Questions About the Social Security Trust Funds
At the end of 2024, the OASI trust fund held $2,538.3 billion in reserves and the DI trust fund held $183.2 billion, a combined balance of roughly $2.7 trillion.15Social Security Administration. A Summary of the 2025 Annual Reports That balance has been shrinking because the program now pays out more each year than it collects in payroll taxes and benefit taxation. The Treasury redeems securities to cover the difference, and interest income helps close the gap. As long as reserves remain, benefits continue in full.
Is Social Security Part of the Federal Budget?
Social Security has a peculiar accounting status. It is classified as “off-budget,” meaning its revenues and spending are technically excluded from the standard budget totals Congress debates each year.16Social Security Administration. The Social Security Trust Funds and the Federal Budget In practice, budget analysts produce two sets of numbers, and the “unified budget” cited in most news coverage includes Social Security.
The off-budget label does not insulate the rest of the government from the program’s finances. When Social Security runs a cash-flow deficit, the Treasury redeems trust fund securities to cover it, and the Treasury borrows from the public to raise that cash. The shortfall therefore adds to the overall federal deficit and to debt held by the public.
How Long the Current Budget Can Continue
The 2025 Trustees Report projects that combined OASI and DI reserves will be depleted in 2034. Depletion does not end the program. Payroll taxes will keep flowing in, and that continuing revenue would cover about 81% of scheduled benefits in 2034, gradually declining to 72% by 2099.17Social Security Administration. 2025 OASDI Trustees Report
The two funds separately show different timelines. The OASI fund covering retirees and survivors faces depletion in 2033, at which point incoming taxes could pay 77% of scheduled retirement benefits.15Social Security Administration. A Summary of the 2025 Annual Reports The DI fund is projected to remain solvent through at least 2099, largely because disability claims have trended downward over the past decade. The Trustees estimate the 75-year shortfall at roughly 4% of taxable payroll. Closing it requires action by Congress; none of the fixes happen automatically.