Many people have valid concerns about whether Social Security benefits can be relied upon in the future. We often discuss this topic with clients as they prepare for retirement. While it might seem logical to claim benefits as early as possible, that approach is usually not the most advantageous. Claiming early can mean giving up tens—sometimes hundreds of thousands of dollars in lifetime, inflation-protected income.
Recent projections show that the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund could be depleted by 2033, as the number of retirees continues to outpace the number of workers contributing to the system. If the trust fund were to run out, benefits would not stop entirely, but they could be reduced to about 77% of what is currently promised, based on incoming payroll tax revenue.
To strengthen Social Security’s long-term solvency, several policy adjustments have been discussed, including:
- Raising the full retirement age for younger workers
- Increasing payroll taxes to boost revenue
- Raising the maximum taxable earnings (currently $176,100 in 2025)
- Reducing benefits for higher-income earners
It’s possible that one or a combination of these measures could be implemented to improve the system’s financial health.
Despite the projected shortfall, Social Security is not going away. The program continues to receive funding through payroll taxes from current workers. As long as people are employed, benefits will continue to be paid—though adjustments to the system are likely in the coming years.
Some people also express concerns about fraud within the system. While fraud does occur, a recent report from the Office of the Inspector General found that fraudulent payments represent a very small percentage of total benefits.
For most retirees, waiting to claim benefits until at least full retirement age—and in many cases, having one spouse wait until age 70—provides greater long-term financial security. Because Social Security benefits rise with inflation, a higher starting benefit can reduce pressure on your investment portfolio later in retirement.
If you haven’t already, we recommend setting up a my Social Security account at ssa.gov/myaccount to review your past earnings and project your future benefits. The Social Security Administration no longer mails annual benefit statements, except to those age 60 and older who have not created an online account.
Winston Churchill famously said, “You can always count on the Americans to do the right thing, after the have tried everything else”.
In our view, that probably is true, and the eventual resolution will likely include taxes.
Ultimately, while Social Security’s funding challenges need to be addressed, the program remains a key component of retirement income for millions of Americans. The best strategy is to incorporate your expected benefits into a comprehensive retirement income plan that reflects your health, longevity, income needs, and overall financial situation—rather than making decisions based on speculation about potential policy changes.
If you have questions about your claiming strategy or how Social Security fits into your broader financial plan, please reach out to your Wealth Advisor to discuss your personal circumstances.
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