Social Security

Social Security (including retirement and disability benefits) is the single largest program funded by the federal government. In fiscal year 2023, Social Security provided benefits to nearly 67 million people and cost $1.3 trillion. The program accounted for 22 percent of total federal spending. Net Medicare spending reached $839 billion, or 14 percent of the budget; national defense totaled $806 billion and accounted for 13 percent of total spending.

Learn more about how Social Security works.

Major healthcare programs

By 2054, the Congressional Budget Office projects that 85 million Americans will be age 65 and over — approximately one-fifth of the U.S. population. The aging of the population, combined with rising healthcare costs and increasing life expectancies, will cause spending on major healthcare programs to grow to almost 30 percent of the budget over the next 30 years, or to 8.3 percent of gross domestic product (GDP).

Learn more about what America spends on healthcare.

Learn more about the Peterson Center on Healthcare.

Note: Welfare programs and unemployment compensation are both components of “Other Spending.”

Interest Costs

The Congressional Budget Office (CBO) projects that interest payments will more than double in the coming years, rising from $892 billion in fiscal year 2024 to $1.7 trillion in 2034. Over the next decade, interest costs will surpass federal spending on discretionary defense spending and the combination of Medicaid, CHIP, and premium tax credits. That growth in spending will continue in subsequent years; CBO projects that in 2051 interest costs will exceed spending on Social Security, thereby making it the largest component of the federal budget.

Learn more about what the national debt is costing us.

2033 — when someone who is currently age 58 turns 67

Over the next few years, the Old-Age and Survivors Insurance Trust Fund is projected to become insolvent. When the balance currently in the fund is depleted, full benefits will no longer be able to be paid, which could result in an immediate 21 percent cut in benefits affecting 70 million retirees. Without action, many of our most vulnerable citizens could face reductions in income that they can ill afford. Policymakers should act soon to make Social Security sustainable so that reforms can be phased in gradually.

See how old you will be when the Social Security Trust Fund expires or learn more about the trust funds.

More than the next 9 highest-spending countries combined

The United States spent $916 billion on national defense in 2023, exceeding the defense spending of China, Russia, India, Saudi Arabia, the United Kingdom, Germany, Ukraine, France, and Japan combined.

Learn more about the link between America’s long-term fiscal health and our national security.

Approximately 1 percent of the budget

The United States spent $69 billion on foreign aid in 2023 — just 1.1 percent of total spending. That spending supports four primary activities: development assistance, security assistance, humanitarian aid, and economic support.

Explore which countries receive foreign aid from the United States, and learn more about the federal budget for international relations.

All of the above

The U.S. spends more on tax expenditures than on Social Security, Medicare, and discretionary defense funding. In 2024, tax breaks are expected to total 7.4 percent of GDP, while all corporate income, individual income, and payroll tax revenues will reach 16.7 percent of GDP.

Learn more about how our tax system works.

6.3 percent of GDP — nearly three times what the federal government has historically spent on research and development, infrastructure, and education combined.

As the debt increases, the government will spend more of its budget on interest costs, increasingly crowding out public investments that are crucial to economic growth.

Federal Insurance Contributions Act, which funds Social Security and Medicare

The FICA line on your paycheck is used to finance Social Security and Medicare’s Hospital Insurance program. FICA taxes are payroll taxes that are imposed equally on the employee and the employer — each pay 6.2 percent of the employee’s annual income (up to a cap of $160,200 in 2023) for Social Security and 1.45 percent of the employee’s income for Medicare (no cap). Self-employed individuals pay both parts.

Learn more about payroll taxes or watch a short video about the different types of taxes that the government collects.

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There are many options available to lawmakers to chart a better course for America, with less debt, faster economic growth, broader prosperity, and enhanced economic opportunity and mobility. In 2024, the Peter G. Peterson Foundation asked experts from seven politically diverse organizations to develop policy proposals to set the federal budget on a long-term path for prosperity and economic growth. All of them achieved that goal. Learn more about each think tank’s blueprint for stabilizing or reducing the federal debt by 2054.

Play the Fiscal Ship game to come up with your own solutions to our nation’s fiscal challenges.