Social Security trustees finally admit the baby rebound isn't coming — but say it's not so bad because Americans will die younger than expected

The result? A long-term funding hole for Social Security.

The 2026 Social Security Trustees Report projects a bigger financing shortfall than last year, driven in large part by lower expected birth rates, weaker immigration growth and a shrinking future workforce.

On the flip side, the report also includes an eyebrow-raising estimate that Americans won’t live as long as previously projected.

Letting go of the rebound

One of the biggest surprises in this year’s report is how dramatically trustees slashed their outlook on fertility. The report lowers the ultimate fertility assumption from 1.90 children per woman to 1.75, which is a notable change from years of forecasts that anticipated a post-recession rebound in births.

It’s a rebound that never ended up materializing.

For Social Security, this is important because the program largely operates on a pay-as-you-go basis, with today’s workers funding today’s retirees through payroll taxes. Fewer babies now means fewer workers paying into the system decades from today.

According to the trustees, the lower fertility assumption alone widened Social Security’s 75-year funding gap by 0.33% of taxable payroll. Tack on reduced immigration projections and the result is a sharp deterioration in the program’s long-term outlook.

Social Security’s projected 75-year funding shortfall jumped to 4.42% of taxable payroll, up from 3.82% in last year’s report. Meanwhile, the projected depletion date for the Old-Age and Survivors Insurance trust fund moved from 2033 to 2032.

If lawmakers fail to act before then, incoming payroll taxes would only be sufficient to cover about 78% of scheduled retirement benefits.

There was some data to partially offset the impact of weaker population growth (though the Center for Retirement Research calls it “unpersuasive”).

Trustees assume faster productivity gains in the future, potentially fueled by technological advances including artificial intelligence. Higher productivity typically translates into higher wages, which means more payroll tax revenue flowing into the system.

And there’s also the assumption of higher mortality rates than were previously projected. The trustees’ assumptions result in a life expectancy at birth of 81.8 years in 2056.

That means future retirees would, on average, collect benefits for fewer years, cutting down on Social Security’s long-term costs.