Last week we discussed the “right” time to claim Social Security and the personal nature of that decision.  This week’s topic cuts to the core of what many of our clients and friends are concerned about – the long-term solvency of Social Security (SSI).  It is a valid concern and many changes to the system are likely to be made in the future.

According to the 2026 EBRI Retirement Confidence Survey, nearly 8 out of 10 workers and 7 out of 10 retirees are concerned the government will make significant changes to America’s retirement system. At the same time, only about half of workers are confident Social Security will continue paying benefits similar to today’s levels.

Our current system relies on a “pay-through” structure.  Current workers (citizens paying Social Security payroll taxes) fund current Social Security recipients. If we have enough workers today, and in the future, paying enough taxes then current benefits could continue unabated.  Any deficiencies are covered by the Social Security Trust Fund.  According to SSI’s latest annual report this fund is expected to be emptied by 2032.

“The current law was written in 1983, the last time Congress dealt with Social Security in any meaningful manner. The law states that Congress cannot borrow money to make up the shortfall in Social Security revenue. Thus, we have the fiction of the trust fund lockbox. When the theoretical trust fund is paid back, Social Security payments will have to be made from current Social Security revenue. That means a mandatory 22-23% cut in all Social Security payments in 2032 or earlier.” John Mauldin, Thoughts from the Frontline

So, when I was a freshman in high school, Congress got to work on SSI.  What I’m hearing now is that they’ve subsequently ignored it as the proverbial third rail of politics. From what I’m reading all is not lost, but there are not many painless solutions and most include higher taxes.

I’ll be discussing potential solutions in Week 4 including the current bill being floated to eliminate the cap on Social Security taxes.  My personal belief is two-fold on this issue. First, the problem is real and not something that can be painted over by more government borrowing. Second, there are solutions and anyone who proposes or implements them will pay a political cost.

For now, we should not be significantly changing our plans based on what might happen to Social Security. However, we should be planning for a future with changes that will likely require more saving and investment on OUR part rather than governmental support.

Next week I’ll discuss some of the math and maximization choices around claiming SSI. We will wrap up with some potential solutions to the funding issues we discussed today.

I hope everyone has a wonderful Fourth of July as we celebrate the country’s 250th anniversary.