Social Security: The Elephant in the Room

For most Americans, Social Security has long been seen as just another payroll deduction—represented by cryptic initials like “FICA” and “OASDI” (Federal Insurance Contributions Act and Old Age, Survivors, and Disability Insurance). While these deductions can symbolize a stable financial future, they often feel distant and intangible.

But now, as millions of Americans approach the age to claim these benefits, questions and concerns continue to arise: Is Social Security financially stable? How much will I receive in benefits? How do I maximize my benefits for myself and my spouse? When should I begin taking Social Security?

Answering the Big Questions

Answering these questions is key to making the most of your Social Security benefits and helping to ensure your financial security in retirement. However, before diving into specifics, we need to address the elephant in the room—the financial health of the Social Security system itself. Over the years, concerns about its solvency have grown, leaving many to wonder whether it will remain robust enough to pay the benefits they’ve been promised.

Reasonable Concern

Social Security was established in 1935 during Franklin D. Roosevelt’s first term and was originally designed to provide financial assistance to older Americans who had little to no means of support. Born out of the economic hardships of the Great Depression, this program addressed a critical need during one of the nation’s most challenging periods.¹

However, in the decades that followed, three key developments have strained the system, leading to the financial challenges that Social Security faces today:

1. Fewer Workers per Retiree: In 1955, there were 8.6 workers for every retiree. By 2023, this ratio had dropped to 2.7 workers per retiree and is projected to fall to 2.4 by 2035. Fewer workers paying into the system means less funding for current benefit payments.^2,3
2. Benefit Expansion: Originally focused on retirement, Social Security eventually expanded to provide income support for disabled workers and surviving family members. These additional benefits were not always matched with the necessary payroll deductions to continue supporting these additional objectives.
3. Longer Life Expectancy: Retirees are living longer. Advances in healthcare and better living standards mean retirees have led to a longer retirement span, placing additional strain on Social Security’s resources.

Since 2010, tax revenue and non-interest income have not fully covered the program’s cost. According to the Social Security Trustees’ 2024 annual report, this pattern is expected to continue for the next 75 years. If no changes are made, the trust fund could potentially be depleted by 2033.⁴

Potential Solutions

While the challenges facing Social Security are real, the prospect of its failure seems unlikely. Policymakers have several options to stabilize the program, including:

• Increase Payroll Taxes: Raising payroll taxes could extend the life of the trust fund, depending on the size of the increase.
• Raise the Retirement Age: This has already been done in past reforms and would save money by paying benefits to future recipients at a later age.
• Tax Benefits of Higher Earners: Applying higher taxes on Social Security benefits for wealthier retirees could generate increased revenue to support the system.
• Modify Inflation Adjustments: Rather than raise benefits in line with the Consumer Price Index (CPI), policymakers could consider correlating future benefit increases to the “chained CPI.” This alternative assumes that individuals move to cheaper alternatives in the face of rising cost, making cost-of-living adjustments less expensive.

The Path Ahead

Reforming Social Security will require tough decisions and bipartisan cooperation. However, with Social Security playing such a vital role for so many retired Americans, lawmakers are expected to come together and find solutions. By addressing these challenges head-on, we can help ensure the program continues to provide support for generations to come.

¹SSA.gov, 2025

³SSA.gov, 2025

³SSA.gov, 2025

⁴SSA.gov, 2025