President Donald Trump’s tariffs and the Trump-led Iran war are accelerating the social security funding shortfall, according to the Social Security Board of Trustees. The Old-Age and Survivors Insurance trust fund is now projected to exhaust its asset reserves in the fourth quarter of 2032, setting up possible benefit cuts of up to 22% for retired workers and survivors.
Gallup surveys show that up to 90% of retirees rely on their monthly Social Security payout in some capacity to make ends meet. Mary Johnson, an independent Social Security and Medicare policy analyst, projected a 3.7% Social Security COLA for next year, while The Senior Citizens League said 2027 COLA is pacing 3.8%.
OASI reserves and 2032
The Trustees report forecasts a $29.3 trillion unfunded obligation through the year 2100. It says the Old-Age and Survivors Insurance trust fund pays monthly benefits to retired workers and survivors of deceased workers, and that the asset reserves collected since inception are the cushion now running down toward the fourth quarter of 2032.
Once those reserves are exhausted, the report says sweeping cuts of up to 22% come into view. That reduction would hit the same monthly checks many retirees already depend on, but it would not mean the program stops sending benefits altogether.
Trump tariffs and COLA
The Trustees base their projections on modest annual COLAs. President Donald Trump introduced sweeping global tariffs and higher reciprocal tariffs on dozens of countries in April 2025, and the U.S. Supreme Court invalidated those tariffs in February 2026.
Social Security’s 2.8% COLA for 2026 was a bit higher because of those tariffs, and last month the Trump administration announced another round of tariffs ranging from 10% to 12.5% on more than 80 countries. The report ties those price pressures to faster benefit growth on paper, which pushes the reserve depletion date closer.
Iran, fuel costs, and benefits
After military operations against Iran began, the Trump-led Iran war closed the Strait of Hormuz to virtually all commercial vessels. The closure caused the largest energy supply disruption in modern history and sent fuel prices soaring, adding another pressure point to the cost-of-living calculations that help set future benefits.
For retirees, the practical result is a narrower window before automatic cuts would begin if Congress does not act before the fourth quarter of 2032. The benefit checks are still scheduled to continue, but the report says the gap between promised benefits and available reserves keeps widening.
Mary Johnson’s 3.7% projection for next year and The Senior Citizens League’s 3.8% pacing for 2027 both sit well below the possible 22% reduction tied to reserve exhaustion, showing how quickly a routine annual adjustment can be overtaken by the underlying financing gap.
