Declining US Birth Rates Will Put Social Security Even Deeper Under Water: Analyst

The fact that America’s trust fund for paying Social Security is running out of money is commonly known, but a new analysis concludes that a decline in birth rates may deplete funds even faster than projected.

In her study of Social Security’s ability to pay its obligations to American seniors, Romina Boccia, an economist and budget expert at the Cato Institute, stated that the Social Security Administration (SSA) has been overly optimistic about the number of babies expected to be born in the United States.

“We noticed that the SSA’s total fertility projections diverged significantly from other forecasters,” Boccia told The Epoch Times. “The SSA’s predictions also diverged significantly from historical U.S. fertility rate trends.”

The SSA calculated the future solvency of the Social Security program based on an assumption that America’s fertility rate, currently about 1.6 children per woman, will increase to 1.9 by the early 2040s.

“The [SSA] Trustees are, by far, the most optimistic about future fertility,” Boccia states in her May 27 report. “By 2100, the SSA projects a total fertility rate roughly 30 percent higher than both the Census Bureau and the [Congressional Budget Office], who project that fertility is likely to continue to decline.”

Much of the discrepancy appears to come from the SSA’s reliance on surveys in which Americans say they plan to have two or more children, and the argument that America’s “cultural and economic climate” will keep it from following the path of other nations in the Organisation for Economic Co-operation and Development (OECD) toward ever-lower birth rates.

However, since 2007, a time marked by the mortgage crisis and recession, U.S. fertility rates that were once significantly higher than other OECD nations have fallen in line with them, Boccia said.

Relatively fewer working Americans, combined with longer life expectancy, has put America’s government retirement system in the red. The SSA’s 2025 annual report states that the Old-Age and Survivors Insurance (OASI) Trust Fund, which partially finances Social Security payments, is only sufficient to pay full benefits to retirees until 2033, after which the fund’s reserves will become depleted and, per the current system, funds will be available to pay only 77 percent of the scheduled benefits.

Created in 1935, the Social Security program is the largest single component of the federal budget, comprising about one-fifth of all federal spending, according to the Peter G. Peterson Foundation. Nearly 68 million Americans, or 20 percent of the population, receive Social Security payments, which on average amount to 31 percent of the total income of U.S. retirees.

Key Reforms in 1983

The OASI fund is composed of receipts from Social Security taxes minus payments to retirees. The fund ran a surplus from 1984 to 2009, largely due to program reforms enacted in 1983, including raising the retirement age and increasing payroll taxes. This produced significant reserves during the 1990s and early 2000s.

Starting in 2010, however, this dynamic went into reverse, and the fund began running cash deficits, which are expected to total $2.5 trillion between 2025 and 2034. Once the OASI is depleted, the gap between revenue and payments for Social Security can be filled by raising taxes, government borrowing, or reducing benefits.

Births and fertility rates have been steadily declining in the United States, falling from 2.1 births per woman—the minimum level that sustains a population—in 1990 to 1.62 births in 2023, according to a 2025 Centers for Disease Control report.

What could this mean for those looking to retire in the coming decades?

“An average dual-earning couple retiring in 2033 is already looking at roughly $17,345 in annual benefit cuts when the trust fund insolvency triggers automatic benefit cuts in six years,” Boccia said. “Under Census Bureau’s more realistic fertility assumptions, that figure could rise by an additional $870, bringing the total to $18,215 in benefit cuts, assuming they were applied evenly, across the entire beneficiary population.”

A global decline in fertility rates is putting pressure on retirement systems worldwide, leaving fewer workers supporting more retirees. According to the SSA, the ratio of working Americans to Social Security beneficiaries was 16.5 in 1950, but fell to 2.8 by 2013.

This trend has continued, and by 2023 there were just 2.7 workers per beneficiary, a Pew Research Center report states. That ratio is projected to decline to 2.1 by the end of this century, with 230.7 million workers supporting 110.4 million beneficiaries.

Currently, not a single U.S. state is seeing average births above the replacement rate of 2.1 children per woman, according to a 2024 report by the Institute for Family Studies. However, more conservative states are coming closest to replacement rates, with South Dakota having the highest fertility rate at 2.01, followed by Nebraska, North Dakota, Alaska, Louisiana, Iowa, Kansas, Texas, Kentucky, and Utah, which were all above 1.8.

The lowest birth rates were in more liberal states: Vermont (1.3), Rhode Island (1.34), Oregon (1.35), New Hampshire (1.38), Massachusetts (1.39), Maine (1.4), Colorado (1.45), California (1.48), Washington (1.48), and Illinois (1.5).

Liberal state birth rates align with the European Union, where the average rate was 1.34 births per woman as of 2024. Japan’s birth rate averages 1.1 children per woman, according to the World Bank, and South Korea’s birth rate is 0.7.

In addition, family migration is adding to the trend of more children in conservative states.

“Blue states that voted for Democratic presidential candidates in both 2016 and 2020 lost 213,000 families with children in 2021 and 2022 (a 0.7% net decline), while red states that voted for President Trump in both elections gained 181,000 families (a 0.6% net gain),” the Institute for Family Studies stated in a 2024 report.

Impact of Immigration

Despite the decline in child births, immigration has kept the U.S. population stable. Immigrants and their U.S.-born children were responsible for the entire growth of the prime working-age population since 2000, a March report by the Migration Policy Institute (MPI) stated.

And even amidst the more permissive policies of the Biden administration toward illegal immigration, under which unauthorized immigrants numbered a record 14 million in 2023, more than three-quarters of all approximately 53 million immigrants into the United States arrived legally as of 2025, as naturalized citizens, lawful permanent residents, or temporary visa holders, according to MPI, the Center for Immigration Studies, and other sources.

“Immigration is a boon for the U.S. economy, including by mitigating some of the fiscal and economic effects of reduced fertility by increasing the number of working-age adults,” Boccia said. “But immigration cannot solve the problem of low fertility.”

First-generation immigrants to the United States often have more children than native-born Americans, she said, but by the second generation, immigrants’ birth rates fall in line with their compatriots.

To return the Social Security program to balance, Boccia recommends raising the retirement age to reflect increases in life expectancy, and indexing eligibility ages to longevity going forward, which many other countries that are facing similar pension shortfalls have done.

Making the program solvent over the long term without changes to eligibility would require a 29 percent payroll tax increase or a 22 percent cut in benefits if action were taken today, the American Action Forum, a policy research group, projects.

“If policymakers wait until 2034, it would require a 34 percent payroll tax increase or a 26 percent across-the-board benefit cut,” the organization states.