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Social Security is probably not something most Americans in their 20s, 30s or 40s spend much time thinking about. Retirement might be decades away, but workers still pay into the program with every paycheck, and there’s no guarantee the benefits they’re counting on now will look the same by the time they retire.
One of the big reasons behind this is the looming bankruptcy of the Old-Age and Survivors Insurance (OASI) trust fund, which is set to run out at the end of 2032 (1).
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After that, payroll taxes would continue coming in, but they would cover only about 78% of scheduled retirement and survivor benefits. That means a 22% cut to your benefits.
Now, the midterms have brought Social Security reform back into the spotlight — with Sen. Bernie Sanders (I-Vt.) pushing for changes to the system after a blue wave swept America.
“A top priority will be to expand Social Security benefits by at least $2,400 a year & extend Social Security’s solvency for generations,” Sanders wrote in a Nov. 7 post on X (2).
“How? By scrapping the cap & demanding that the wealthy pay their fair share of taxes.”
Sanders has previously called on Democratic lawmakers to make higher earners pay Social Security tax on more of their income. However, this proposal would still need to pass in the House, receive 60-vote Senate approval and be signed off on by the executive branch.
But this is also just one proposal, and Congress has yet to agree on how to address the funding shortfall.
There is also the cost of President Donald Trump’s One Big Beautiful Bill Act (OBBBA) to consider. Although the OBBBA provided additional taxable deductions for retirees, the Committee for a Responsible Federal Budget estimates that these tax changes will move the projected insolvency date of the OASI forward by a year, from 2033 to 2032 (3).
For younger workers, the concern is not just whether Social Security will be there — it’s how much they can expect to receive, how much they may have to pay into it and whether they should be making other plans for retirement in the meantime.
Here’s what you need to know about the deadline and how you can prepare yourself — regardless of what happens to your benefit payouts.
What the midterms mean for Social Security
With Democrats set to take control of both chambers in January 2027 (4), they’ll have more say over which Social Security proposals get attention. But the election results won’t change benefits on their own — and Congress still has to agree on a plan to shore up the program.
Some of the incoming senators have been more specific about what they want to change. For example, both Illinois Democrat Juliana Stratton and Iowa Democrat Josh Turek support removing the cap on earnings subject to Social Security taxes. Meanwhile, Kansas Democrat Adam Hamilton wants to raise the cap instead, while Texas Democrat James Talarico has proposed taxing earnings above $400,000 (5).
The income cap is $184,500 for 2026. That means workers pay 6.2% in Social Security tax on their earnings up to that amount, with their employers paying another 6.2%. Any wages above the cap aren’t subject to Social Security tax (6). Raising or removing the cap would bring more high earners’ income into the system, although lawmakers would still have to decide exactly how to make the change.
Getting any changes through Congress won’t be easy. Social Security reform can’t be included in a budget reconciliation bill, which can pass the Senate with a simple majority. Most other bills need 60 votes to get past a filibuster. So even with Democrats holding the majority, they’ll likely need some Republican support to get a major Social Security overhaul across the finish line (7).
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Benefit cuts on the horizon
Ultimately, most beneficiaries aside from single-income couples are facing a five-figure hole in their retirement plan. And it’s not just that 22% drop.
A Committee for a Responsible Federal Budget (CRFB) analysis of the OBBBA, not the Trustees Report, estimates that a typical two-income couple retiring in early 2033 could face a 24% benefit cut (8).
For a typical dual-income household, that’s an $18,100 reduction in annual benefits. The cut could be even deeper for high-income households, who face a $24,000 annual reduction on average. Top earners could face additional taxes on their benefits as well if Sanders’ proposal goes through.
Low-income couples would see a $11,000 reduction, which is nominally lower but likely to be a more meaningful chunk of a retired couple’s annual budget.
However, what someone actually loses would depend on their earnings history, the benefits they’re entitled to and whether Congress makes changes before then.
Although this cut isn’t inevitable, planning for it should make your retirement plan more shock-proof. A qualified financial planner can help you run the numbers and see what it will take to plug that gap independently.
They can also help you take advantage of the OBBBA’s additional tax breaks so you can better protect yourself now, even if the system is being set up to suffer later.
Finding the right advisor is simple with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.
A professional advisor can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations — two key factors in building the right asset mix for your portfolio.
Through Advisor.com, you can schedule a free, no-obligation consultation to discuss your retirement goals and long-term financial plan.
What is the best-case scenario?
Social Security’s trust fund depletion isn’t inevitable. Coordinated action by lawmakers in the next few years could unlock the best-case scenario for all workers and retirees.
Congress and a future president could also act together to reform the system in ways that bolsters its finances and avoids the double-digit benefit cut.
For instance, lawmakers could raise the retirement age or eligibility age for benefits, according to recommendations from the Brookings Institution (9) and the CRFB (10). They could also raise payroll taxes, increase the taxable income subject to payroll taxes or place a cap on benefits paid to high-income beneficiaries.
Some lawmakers want to get rid of the income cap altogether, while others would rather raise it. Either way, higher earners would pay Social Security tax on more of their income. The Social Security Administration estimates that removing the cap in 2027, without increasing benefits for those additional taxed earnings, would cover 58% of the program’s projected funding shortfall over 75 years (11).
For young workers, many of these potential solutions could carry real downsides. You may have to work longer or pay more in taxes to keep the system afloat long enough to benefit you when you get old.
Simply put, even the best-case scenario might not be all that great for you.
What can you do?
With the public safety net fraying and at risk, it might be a good idea to focus on building independent protections.
A robust nest egg can help you retire comfortably even if the Social Security system is significantly altered by the time you reach your 60s or 70s. However, to create a sizable nest egg, you need a plan that carefully balances risks and rewards while considering the impact of long-term inflation.
Most conventional financial wisdom recommends a 60/40 split between stocks and bonds — with one designed to offset the other. However, in the event of serious market turmoil, both can drop simultaneously.
This is why some investors dedicate parts of their portfolio to alternative assets and precious metals like gold.
According to a report by Goldman Sachs (12): “The yellow metal typically only guards against very high inflation and large inflation surprises caused by losses in central bank credibility and geopolitical supply shocks.”
The investment bank found that commodities in general offered good protection against inflation, but gold performed better than its energy, industrial and agricultural peers over time.
This is one reason why some investors consider gold a safe-haven asset. During a downturn, whether Social Security collapse or a market nose dive, gold can help preserve wealth you might have otherwise lost.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of American Hartford Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account — combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those looking to potentially hedge their retirement funds against economic uncertainties.
Even better, you can often roll over existing 401(k) or IRA accounts into a gold IRA without tax-related penalties. American Hartford Gold also helps keep startup costs down with free account setup, free insured shipping and up to five years of free storage. To learn more, get your free information guide on investing in precious metals.
If you change your mind, you can cancel within seven days for a full refund on eligible assets. With their price protection guarantee, if prices drop within seven days of your purchase, your order is repriced to reflect the lower price. Qualifying purchases can also receive up to $25,000 in free silver.
A robust and shock-proof IRA, along with a well-funded 401(k) or brokerage account, are the first steps to offsetting some of the uncertainty with Social Security benefits. The system might be either fixed or underfunded by the time you file your claim, but a sizable personal nest egg can ensure a good retirement either way.
For those just starting out, and trying to make sure you have enough for retirement, one of the best things you can do is develop consistent investing habits early. After all, the best way to dodge the collapse of Social Security payments is to ensure that they’re a bonus, not a lifeline.
If you’re looking to get into set-and-forget investing, you can get started with Acorns, an app that automatically invests your spare change.
How it works is simple: Just sign up and link your debit or credit cards. Then, every time you buy something, Acorns rounds up the total to the nearest dollar. This turns a morning coffee for $3.25 into a 75-cent investment in your future.
From here, that money goes into a diversified portfolio of ETFs that you can tailor to your risk tolerance. Along with big names like the Vanguard S&P 500 ETF, Acorns also sets you up to invest in specific sectors of the economy through custom portfolios. This includes areas like heavy industry, energy, consumer staples and utilities.
Then, once you’re comfortable with your round-ups, you can supercharge your retirement saving with recurring monthly deposits. And if you sign up today with a $5 recurring contribution, Acorns will add a $20 bonus to help you begin your investment journey.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Social Security Administration (1), (6), (11); X (2); Committee for a Responsible Federal Budget (3), (8), (10); Associated Press (4); Fortune (5); Every CRS Report (7); Brookings Institution (9); Goldman Sachs (12)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
