Social Security Solvency: What it Means for Today’s and Tomorrow’s Retirees
For nearly 90 years, Social Security has been the cornerstone of retirement income for millions of Americans. But with headlines about “trust fund depletion” and “program insolvency,” many people approaching retirement are asking: Will Social Security still be there for me?
The answer is more nuanced than a simple yes or no. While Social Security is not going away, its long-term funding challenges may affect future retirees in ways worth preparing for today.
The Funding Challenge
Social Security is funded largely through payroll taxes, with today’s workers paying into the system to support current retirees. For decades, when payroll tax revenues exceeded benefit payments, the program built up a trust fund surplus — essentially a reserve of Treasury bonds to help cover future needs.
However, as Baby Boomers retire and Americans live longer, the math has shifted. Fewer workers are paying into the system relative to the number of retirees drawing benefits. Today, Social Security is spending more than it collects, and the trust fund is being tapped to make up the difference.
The Solvency Timeline
According to the 2025 Social Security Trustees Report Summary, the combined trust funds are projected to run dry around 2034. At that point, payroll taxes alone would cover about 77% of scheduled benefits.
This does not mean Social Security will disappear. It means that unless Congress acts, retirees could see across-the-board benefit reductions of roughly 15–20% to bring payouts in line with revenues. Historically, lawmakers have been reluctant to cut benefits for current retirees, but reforms are likely to be debated in the years ahead.
What It Means for Retirees
For those already retired, benefits are unlikely to change in the short term. Annual cost-of-living adjustments will continue, though inflation pressures and funding challenges may make them smaller over time. The bigger risk is political uncertainty — future legislation could affect how benefits are taxed or how adjustments are calculated.
For those planning to retire in the next 10 years, the picture is less certain. Full benefits are still likely, but the rules could shift. Possible reforms include raising the payroll tax cap, gradually increasing the full retirement age, or adjusting the benefit formula for higher earners. There is also discussion of means-testing, which would reduce or phase out benefits for wealthier households.
Planning Around the Unknown
The bottom line is that Social Security should remain a central piece of retirement income, but not the only piece. That’s why it’s important to plan proactively.
One of the most effective ways to prepare is to run detailed retirement income models, including Monte Carlo simulations, that stress test your plan under different market and benefit scenarios. This type of analysis can help you understand how resilient your retirement income is, even if Social Security were reduced.
In addition, building multiple income streams from retirement accounts, investments, and other strategies can reduce your reliance on Social Security. Tax planning also plays a key role, since the way you withdraw from accounts like IRAs or 401(k)s can affect how much of your Social Security is taxable. A thoughtful approach can help preserve more of your benefits and create greater stability in retirement.
Final Thoughts
Social Security is not disappearing, but the program faces serious funding challenges that could lead to changes in the next decade. By understanding the issues now and taking steps to prepare, you can feel more confident about your retirement future — regardless of what Washington decides.
At Saxony Advisors, we help retirees and near-retirees model their income, test different scenarios, and design strategies that integrate Social Security with tax-smart withdrawals and diversified income sources. That way, your retirement doesn’t hinge on just one program.
