Bridge Over Troubled Waters: How Social Security Fits into the National Debt
October 01, 2026
Lisa Germano, JD, CPA, is co-founder, president and general counsel at Actuarial Benefits & Design Company in Midlothian.
A note from Lisa: Financial literacy for retirement plans comes in many forms and I hope this column provides insightful information for plan participants as well as plan sponsors. Some of us wear both hats and the goal should remain the same: dignified retirement at the right time and in the manner we want for Simply the Best Time of Life. Any suggestion for topics is welcome!
What is the U.S. National Debt?
The U.S. national debt is the cumulative amount the federal government has borrowed because federal spending has exceeded federal revenues over time. A budget deficit is the shortfall for a particular year; the debt is the accumulated borrowing resulting from prior deficits and other financing needs.1
The Treasury reports the debt in two principal components: debt held by the public and intragovernmental holdings. Debt held by the public includes Treasury securities held outside the federal government, including by individuals, financial institutions, pension and investment funds, the Federal Reserve and foreign investors. Intragovernmental holdings are Treasury securities held by federal trust funds and other government accounts, including Social Security.1
By late August 2026, gross federal debt was roughly $40 trillion. Because the figure changes every business day, the authoritative source for the current amount is the Treasury’s “Debt to the Penny” dataset.2
Thoughts From VSCPA Friends
At least 15 years ago, David Walker began a national initiative about the federal debt and how CPAs need to understand its impact on our nation. He also advocated for CPAs to help Congress do the same.
Locally, former VSCPA chair Tom Visotsky, CPA, initiated a Virginia conversation.
As long as Social Security continues as a leg to our economic supporting stool for retirement income, it must be part of the overall view to the future. Reading the Trustee’s report, perhaps we should discount our near term Social Security income by 23%.
“The $40 trillion federal debt is huge. However, it’s dwarfed by the unfunded present value obligations of Social Security ($28T) and Medicare ($60T).
The total debt of all three obligations is $128T. That equals 74% of the entire net worth of ALL Americans. To put that in a perspective that people can understand, $40T equals $117,000 for every man, woman and child in America.
The $128T equals $374,000. Wealth is highly concentrated in the U.S., as the top 1% own 31.6% of all net worth. Since the bottom 50% only own 2.45%, it is unrealistic to think that they can afford to pay any of this debt.
Eliminating the bottom 50%, means a doubling of the obligations for the top 50%. Meanwhile, politicians have been making matters worse for the federal government.
For proof of this, look no further than last year’s large tax decrease, which lowered government revenues, thereby increasing annual deficits. Interest rates are rising, and each 1% increase adds $400 billion in annual interest to government expenses.
We are in a deep hole, but politicians keep digging us deeper in debt.” — Tom Visotsky
The Numbers to Understand, Separately
Measure | Approximate Amount / Status | What It Means |
| Gross Federal Debt | Roughly $40 trillion | All outstanding Treasury debt: debt held by the public plus intragovernmental holdings. |
| Debt Held By the Public | About the size of annual U.S. GDP | Treasury debt held outside federal government accounts. CBO projects it at 101% of GDP in 2026 and 120% in 2036. |
| Intragovernmental Debt | Part of gross federal debt | Treasury obligations held by federal trust funds and accounts, including Social Security trust funds. |
| Social Security Trust Fund Reserves | About $2.56 trillion at end of 2025 | Assets of the OASI and DI trust funds, primarily special Treasury securities. The federal government borrowed these funds and will need to raise funds in order to pay back these reserve balances. |
| Social Security 75-Year Unfunded Obligation | $29.3 trillion present value | Projected excess of scheduled Social Security costs over dedicated income through 2100, reduced by starting trust fund reserves. |
| Social Security Infinite-Horizon Unfunded Obligation | $71.9 trillion present value | A much longer-range actuarial measure extending indefinitely; the Trustees caution that uncertainty rises substantially farther into the future. |
Important: The Social Security unfunded obligation is not an additional Treasury debt balance. It is a present-value projection under specified demographic and economic assumptions.4
The National Debt Clock in New York City
The National Debt Clock is a private public-awareness project, not a federal government display. New York real-estate developer Seymour Durst conceived it to make the scale of federal borrowing visible to the public. The original clock was installed on Feb. 20, 1989, at the northwest corner of Sixth Avenue and 42nd Street, when the national debt was nearing $3 trillion.3
| Year | Debt Clock Milestone |
| 1989 | Original clock installed near Times Square; debt was approaching $3 trillion. |
| 2000 | Clock switched off as the federal debt was slowly decreasing during the period of federal budget surpluses. |
| 2002 | Clock reactivated as deficits and debt growth returned. |
| 2004 | A replacement clock was installed on West 44th Street and Avenue of the Americas. |
| 2008 | When federal debt exceeded $10 trillion, the display required an additional digit. |
| 2018 | The clock was relocated to Anita’s Way between One Bryant Park and One Five One West 42nd Street. |
The clock’s value is symbolic as much as numerical: The Durst organization’s mission was to turn an abstract fiscal statistic into a continuously moving public display and to frame the debt question as one of intergenerational responsibility.3
Recently, hearings were taking place about Social Security. The hearing, “Exploring Process Approaches for Addressing Social Security Solvency,” included witnesses who have much thought and experience to help guide the Senate Finance Committee.
Where Social Security Fits
Social Security operates through two trust funds: Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), often discussed together as OASDI. At the end of 2025, the combined trust funds held approximately $2.56 trillion in reserves. Those reserves are primarily Treasury securities and therefore already appear within intragovernmental federal debt.4
The 2026 Social Security Trustees Report projects that the combined OASDI trust funds will be depleted in 2034 under its intermediate assumptions. At depletion, continuing dedicated income would initially be sufficient to pay about 83% of scheduled benefits. OASI alone is projected to deplete its reserves in the fourth quarter of 2032.5
The same report estimates a 75-year open-group unfunded obligation of $29.3 trillion in present-value dollars through 2100.
“Open Group means money SSA uses to pay us in retirement includes money they take through payroll deductions from our kids and grandkids. Kind of like if you personally didn’t save enough for your retirement, so you just took money your kids put aside for their retirement.” — Tom Visotsky
Over the infinite horizon, the estimated unfunded obligation is $71.9 trillion, but the Trustees emphasize that uncertainty increases substantially as projections extend farther into the future.4
A Useful Visual: Two Different Measurements
≈ $40 TRILLION Gross federal debt Existing Treasury obligations already outstanding today. | $29.3 TRILLION Social Security 75-year unfunded obligation Present value of a projected future financing gap through 2100 under current-law assumptions. |
≈ $40 TRILLION Gross federal debt Existing Treasury obligations already outstanding today. | $29.3 TRILLION Social Security 75-year unfunded obligation Present value of a projected future financing gap through 2100 under current-law assumptions. |
Do not add these numbers together as though both were current federal debt.
Why the Debt is Projected to Keep Growing
The Congressional Budget Office (CBO) projects a $1.9 trillion federal deficit in fiscal year 2026, rising to $3.1 trillion by 2036. Debt held by the public is projected to rise from 101% of GDP in 2026 to 120% in 2036 and to 175% by 2056 under current law. CBO identifies rising mandatory spending and growing net interest costs as major drivers.6
Interest is becoming a major budget constraint in its own right. CBO projects net interest outlays to rise from about $1 trillion in 2026 to $2.1 trillion in 2036. By 2056, CBO projects net interest at 6.9% of GDP, exceeding projected spending on either Social Security or Medicare individually.6
The Government Accountability Office (GAO) similarly describes the federal fiscal path as unsustainable and reported that net interest spending in fiscal year 2025 exceeded federal spending on national defense. GAO recommends Congress develop and implement a comprehensive fiscal strategy.7
What Would ‘Fixing’ the Debt Mean?
There is no single agreed-upon solution. Most serious fiscal discussions focus on stabilizing debt relative to the size of the economy rather than literally eliminating every dollar of federal debt. The debate concerns how quickly to stabilize the debt and how to distribute the adjustment among taxpayers, beneficiaries, federal programs and future generations.
Approach | What It Could Include | Central Trade-Off |
| Reduce spending growth | Lower discretionary spending; restructure or slow the growth of mandatory programs. | Can reduce borrowing directly, but large savings become difficult if major programs such as Social Security, Medicare, defense and interest are excluded. |
| Increase federal revenue | Raise tax rates, broaden tax bases, reduce exclusions/deductions, or adopt new sources of revenue. | Can close structural gaps without direct benefit cuts, but the economic and distributional effects depend heavily on design. |
| Reform Social Security | Increase payroll-tax revenue, modify taxable wage rules, adjust benefit formulas, change retirement ages, or combine revenue and benefit changes. | Can restore program solvency, but reform allocates costs differently across workers, retirees, income groups and generations. |
| Reform Medicare and health spending | Change payment systems, premiums, cost sharing, eligibility rules, drug policy, or broader health-cost growth. | Health spending is central to the long-run budget; savings can be technically and politically difficult. |
| Increase economic growth | Policies aimed at productivity, labor-force participation, investment, immigration and capital formation. | Faster GDP growth improves debt sustainability, but mainstream projections generally do not assume growth alone will eliminate the structural gap. |
| Use a bipartisan combination | Phase in spending restraint, entitlement changes, additional revenue, and protections for vulnerable populations. | Spreads the adjustment across multiple channels and can allow gradual implementation, but requires difficult political trade-offs. |
Social Security: The Size of the Required Adjustment
The 2026 Trustee report quantifies the Social Security solvency gap to show the scale of action required. If an immediate change beginning in 2026 were used to produce 75-year solvency, the report illustrates that the combined payroll-tax rate could be increased from 12.4% to 16.65%, or scheduled benefits could be reduced by 25.2% for all current and future beneficiaries, or an equivalent combination could be adopted. These are illustrations of magnitude, not recommendations.4
That arithmetic is also why timing matters. Earlier action allows changes to be phased in more gradually and spread across more stakeholders. Delaying action until trust-fund depletion would require larger adjustments over a shorter period.5
If you listen and set yourself to receive alerts about Social Security solvency, you will have a better way to judge whether to adjust your planning numbers for the Social Security impact on your retirement income planning and that may likewise adjust your 401(k) savings.
Parting Thoughts
The United States does not face one single “debt number.” The National Debt Clock captures the gross federal debt already outstanding. CBO and GAO focus heavily on debt held by the public relative to GDP because that measure better reflects the government’s borrowing burden on financial markets and the economy.
Social Security’s $29.3 trillion 75-year unfunded obligation is a different kind of measure: it estimates a projected financing shortfall between future scheduled benefits and dedicated program income.
The policy dispute is therefore not primarily about whether the federal government has a long-term fiscal imbalance; Treasury, CBO, GAO, and the Social Security trustees all provide evidence of that imbalance. The harder question is how the adjustment should be divided among spending restraint, entitlement reform, additional revenue, economic growth and future generations — and how soon policymakers are willing to act.
Citations to Nonpartisan Information
- U.S. Department of the Treasury, Fiscal Data, “Understanding the National Debt.”
- U.S. Department of the Treasury, Fiscal Data, “Debt to the Penny.” Debt data are updated each business day.
- The Durst Organization, “National Debt Clock.”
- Social Security Administration, 2026 OASDI Trustees Report, Highlights and long-range actuarial estimates, including the $29.3 trillion 75-year unfunded obligation and the illustrative solvency-gap measures.
- Social Security Administration, 2026 Trustees Report Summary and Overview, including projected OASI and combined OASDI reserve depletion dates and percentages of scheduled benefits payable at depletion.
- Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036, February 2026.
- U.S. Government Accountability Office, The Nation’s Fiscal Health: Urgent and Sustained Action Needed to Improve the Fiscal Outlook, GAO-26-108610, June 11, 2026.
- Social Security Administration, 2026 OASDI Trustees Report, Infinite Horizon Projections.
Downloadable Resource for CPAs
Lisa has prepared a free infographic on on the national debt that CPAs can download and disseminate to clients.