Will Social Security run out? Here's what could happen to your benefits

Social Security's trust fund reserves are projected to be depleted by 2035, at which point the program would only be able to pay 83% of scheduled benefits without congressional action. While this isn't the program "going broke," it represents a significant challenge driven by baby boomer retirements, declining birth rates, and longer lifespans creating fewer workers per retiree. The recent Social Security Fairness Act improved benefits for public sector workers but worsened the program's financial outlook, highlighting the urgent need for comprehensive reform that becomes more difficult and expensive with each year of delay.

Social Security continues to dominate headlines as the program navigates both recent policy changes and looming long-term challenges. The most significant development has been the implementation of the Social Security Fairness Act, which took effect in January 2025 and began delivering benefit increases to affected workers in February. This legislation eliminated the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which had reduced Social Security benefits for approximately 2.8 million Americans who also receive pensions from work not covered by Social Security, including many teachers, firefighters, police officers, and federal employees.

The Social Security Administration has been working to process these changes, with affected beneficiaries seeing monthly benefit increases ranging from an average of $360 to $1,190, plus retroactive lump-sum payments covering the enhanced benefits back to January 2024. While this creates more fairness for public sector workers who were previously penalized for their government service, budget experts and policy analysts have expressed concerns about the timing and scope of these changes. The Congressional Budget Office estimates that eliminating these provisions will worsen Social Security's already challenging financial outlook by increasing benefit payments without any corresponding revenue increases.

Adding to the complexity, the 2025 Cost of Living Adjustment brought a 2.5% increase to Social Security benefits, translating to an average monthly increase of $49 per check for the program's 72.5 million beneficiaries. While this adjustment helps retirees keep pace with inflation, it also adds to the program's long-term costs at a time when the trust funds are already under pressure. The adjustment is based on changes in the Consumer Price Index and represents a more moderate increase compared to recent years when inflation was running higher.

Congressional discussions around broader Social Security reform remain politically fraught, with lawmakers from both parties acknowledging the need for action while disagreeing on solutions. Some proposals focus on revenue increases, such as raising or eliminating the current payroll tax cap of $176,100, while others emphasize benefit modifications or changes to retirement age eligibility. The challenge is that comprehensive reform requires bipartisan cooperation, and with the 2035 deadline approaching, the window for gradual, less disruptive changes continues to narrow.

Recent polling continues to show strong public support for Social Security, with 90% of Americans age 50 and older calling it "very important" according to AARP research. However, this broad support hasn't translated into political consensus on how to address the program's financial challenges. Policy experts warn that waiting until 2035 would require much more dramatic adjustments - potentially a 32% payroll tax increase or 25% across-the-board benefit cuts - compared to acting sooner when more gradual changes could restore solvency.

If you're currently between 40 and 70, Social Security's solvency challenges will likely impact your retirement planning in concrete ways. Those currently in their 60s may see minimal changes, as any reforms typically protect current retirees and those close to retirement. However, if you're in your 40s or 50s, you should prepare for the possibility that your full retirement age might increase, your benefits might be calculated differently, or the taxes funding the system might rise.

The key is not to panic, but to plan wisely. Social Security was never designed to be your sole source of retirement income - it's meant to be one leg of a three-legged stool alongside employer-sponsored retirement plans and personal savings. Even in the worst-case scenario where benefits are reduced by 17% in 2035, Social Security would still provide a foundation of income security. This makes it more important than ever to maximize your other retirement savings through 401(k) contributions, IRAs, and other investment vehicles. Consider this an opportunity to take greater control of your financial future and ensure your retirement security doesn't depend entirely on government programs, but rather on the wisdom and stewardship you demonstrate today.

As always, this general information doesn't constitute personalized financial advice. Feel free to reach out if you'd like to discuss how any of these developments might affect your specific financial plan.