The Social Security budget by year has climbed from $781 million in benefit payments in 1950 to a projected $1.58 trillion in combined program costs for fiscal year 2025.1 It is now the single largest line item in the federal budget and pays benefits to roughly 68 million people through retirement, survivor, and disability programs.
Annual Spending, 1950 to Today
The growth curve is steep. In 1950, benefit payments totaled $781 million and made up less than 2 percent of federal spending. By 1980, annual payments had reached $118.5 billion, driven by expanded eligibility and the automatic cost-of-living adjustments that Congress introduced in 1975. Those yearly COLAs compound on top of a growing beneficiary population, which is why totals keep rising even in years when new enrollment is flat.
By 2000, annual payments were $409.4 billion. The program crossed $1 trillion in the 2020s. In calendar year 2024, Social Security paid out $1.47 trillion in total benefits, and the Social Security Administration projects combined program costs of about $1.58 trillion for fiscal 2025. The program’s share of federal spending has risen from under 2 percent in 1950 to more than 20 percent since the early 1990s.
The 2026 COLA is 2.8 percent, affecting roughly 75 million people. The average monthly retirement benefit as of January 2026 is $2,071.
Where the Money Goes
Retirement and Survivors
The Old-Age and Survivors Insurance (OASI) trust fund covers about 90 percent of all Social Security spending. It pays retired workers, their spouses and children, and surviving family members of deceased workers. The retirement side alone serves an estimated 62 million beneficiaries.
Disability Insurance
The Disability Insurance (DI) trust fund is legally and financially separate from OASI. In 2023, DI expenditures totaled $154.8 billion, about one-tenth of combined program costs. Roughly 8.5 million workers receive DI benefits, and the beneficiary count has actually declined since peaking around 2014, which has held DI spending relatively stable.
Administrative Costs
Running the Social Security Administration is a small share of the total. The agency’s budget request for fiscal 2026 is $14.8 billion, covering staff, field offices, technology, and the state disability determination services. That is less than 1 percent of benefit payments. By law, administrative costs are paid from the trust funds themselves, not from general revenue.
Where the Money Comes From
Payroll taxes under the Federal Insurance Contributions Act are the main source. Employers and employees each pay 6.2 percent on earnings up to $184,500 in 2026, for a combined 12.4 percent. Self-employed workers pay the full 12.4 percent under the Self-Employment Contributions Act.
Two smaller streams round out the funding. A portion of benefits paid to higher-income recipients is taxed, with the revenue returned to the trust funds, and the funds earn interest on the special-issue Treasury securities they hold.
In 2023, total income to the combined OASI and DI trust funds was $1.35 trillion: roughly $1.23 trillion from payroll taxes, $51 billion from taxation of benefits, and $67 billion in interest. By fiscal 2025, total income had risen to an estimated $1.44 trillion. That is not enough to keep up with benefit costs. In fiscal 2025, the combined funds spent about $144 billion more than they took in, and the difference is being covered by drawing down reserves.
Trust Fund Balances and the Road to 2033
At the end of 2024, OASI held $2.54 trillion in reserves and DI held $183.2 billion. The OASI balance shrinks each year because outgoing benefits exceed incoming revenue.
According to the 2025 Annual Report of the Board of Trustees, OASI can pay full scheduled benefits until 2033. After that, ongoing payroll tax revenue would cover about 77 percent of promised benefits, an effective 23 percent cut for retirees and survivors unless Congress acts first. The Congressional Budget Office’s independent projection puts OASI exhaustion a year earlier, in 2032.
If OASI and DI were combined, their joint reserves would last until 2034, and 81 percent of scheduled benefits could then be paid from continuing revenue. The two funds are legally separate, so Congress would have to authorize transfers, as it has done in the past. DI on its own is in far stronger shape, with reserves projected to last through at least 2099.
Depletion does not shut the program down. Payroll taxes keep flowing regardless of the trust fund balance, so most benefits would continue. What the trajectory shows is the size of the gap between what is owed and what can be paid, and how much narrower the options for closing it get with each passing year.