Social Security Update as it Hits 90

Aug. 14 will mark the 90^th anniversary of Social Security, which provides benefits to 70 million or one in five Americans. And while it has proven to be one of the government’s most stable institutions, that’s not without a ton of public uncertainties about its future.

According to the 2025 Social Security Trustee’s Report, the primary trust fund is projected to be depleted in 2033—no change from last year’s projection. And unless Congress acts, current and future beneficiaries alike will see their benefits cut by 23%.

Analysts have been saying for years that Congress will never let that happen, but Congress still hasn’t acted. What that has meant for many recipients, despite those assurances, is uncertainty. And for some of people who will depend on Social Security income for the rest of their lives it means making decisions – like taking benefits early – that may not be in their best interest over the long term.

Should we be worried?

“That’s the headline that everybody grabs, like, ‘Oh, no, Social Security’s going bankrupt,” says Brian Remson, advanced planning specialist at Credent Wealth Management in Woodway, Teas. “However, that that is not really fair to say, because even in 2035 there’s still going to be enough revenue from payroll taxes to cover anywhere from 80 to 85% of benefits.

“Of course, we understand that and drive an emotion,” he says. “However, they just see a headline and go from there. You can’t fight emotion with facts generally when you’re talking with clients, so you do have to understand the concern.”

Jennifer Belmont Jennings, an attorney and financial planner at MGD Law in St. Louis, Missouri, says she’s not worried, especially for people already receiving benefits. “I’m not personally worried, because they, they will raise taxes, and they will make changes in order to pay the Social Security benefit,” she says.

“I could see them making changes, but I think if social security goes bankrupt and they can’t pay those bills, we have a lot bigger problems on our hands,” she says.

Remson says the solvency of Social Security has been a common question since he has been in the business. “I can fully understand that the more the clients rely on Social Security, the more stress they’re going to have.”

What about younger people?

If anyone should be concerned about their benefits it should be younger people, maybe Millennials and Gen Z. One potential Social Security shortfall is that people are living longer, and thus, drawing benefits longer. Potential solutions include increasing the full retirement (currently 66) and increasing the percentage of your income subject to Social Security taxes (currently $176,100.

Belmont Jennings says younger people should always be preparing for the future and taking planning seriously. “They should be running the numbers to show how much money should I be putting away now to make sure I have what I need later. The sooner you start, the smaller percentage of your income you have to put away in order to get there. All of the math shows that it’s a lot harder to catch up. And so, if you’re putting that money away now, you’re going to be okay no matter what happens.”

Impact of the Trump Budget Bill

The senior deduction bonus has been one of the more confusing parts of the bill. Promoted as eliminating taxes on Social Security, the provision actually gives taxpayers 65 and older an additional $6,000 deduction ($12,000 for married couples). The impact could significantly reduce taxable income.

“I think estimates show that close to 60% of people weren’t even paying tax on Social Security,” says Belmont Jennings. “I think sometimes we forget that most of the country is not ultra-high net worth. So, a lot of people were not paying any tax at all on social security because you have a high standard deduction. And not all social security is taxable anyway.”

Remember: The Social Security Administration is planning to shift from paper checks to electronic payments in September.  Learn more here. 

Wait till 70?

Keep in mind that the recommendation was never a blanket endorsement of waiting until 70 to receive benefits. Actually, a small percentage of people wait till 70 – only 8 percent.

“I don’t think anything has changed,” says Belmont Jennings. “It’s a very personal decision. People who have a shorter life expectancy, you know you’re not going to make it until you’re 90s, the math is going to show maybe you should start taking that money earlier. If you’re married  and you’re still working, it might make sense to at least make sure the person who has the highest potential social security income may still want to wait until the till 70 to collect.

“But I think this is it’s a very personal decision based on your circumstances, based on whether or not you’re continuing to work, based on whether or not you feel like you have that long life expectancy”

“Everybody’s different,” says Remson. “The biggest thing is, is, as you do financial planning, that decision (when to begin taking Social Security benefits) cannot be done in isolation. Pretty much every calculator out there is going to say, you know, wait till you’re 70. However, we have had instances that that, if the client only has IRA assets or retirement assets that are pre-tax, it actually might make sense for clients to take Social Security at full retirement age to provide cash flow versus age 70.”

YOUR TURN

What do you think will happen with Social Security? Add your predictions in the comments!

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Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post and USA TODAY and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America” was released in 2024. He is also author of the book “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com

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