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Social Security’s Financial Outlook - Yahoo! Finance
There is a lot of talk these days about the financial outlook of the Social Security program, because the Trustees of that program suggest that the reserves which now supplement everyone’s monthly SS benefit are likely to run dry in about 2033 or 2034. That’s a pretty disheartening outlook, but it’s not one which Congress hasn’t been aware of for a long time. In fact, the Trustees of Social Security have warned Congress for decades that unless the SS program is reformed soon, everyone could see a cut of about 23% to 25% in their monthly SS check starting in about 2033 or 2034. You would think, then, that Congress would be looking for ways to avoid Social Security’s financial dilemma.
It seems, however, that the opposite is true. Last year, a 2024 proposal to eliminate the provisions known as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) (H.R. 82) was signed by President Biden in January 2025, shortly before his administration ended. This bill cut into Social Security’s finances by about $200 billion over the next decade. Then in 2025, the so-called “One Big Beautiful Bill” (OBBB) was signed into law by President Trump to (among other things) offset income tax on Social Security benefits. And that slated another $169 billion to come from Social Security’s coffers over the next 10 years. Hardly a serious effort by Congress to reform Social Security to restore it to solvency! This Yahoo! Finance article by Motley Fool’s Sean Williams primarily laments the OBBB, but neglects the impact of H.R. 82, both of which harm Social Security’s long term financial outlook.
At the end, the article correct reveals that Social Security’s financial woes are a lot more complex than either of the two bills discussed above. Rather, several factors have converged to make SS insolvency become a critical issue, not the least of which is what Mr. Williams describes as “income inequality” – that too much earned income is exempt from Social Security payroll tax. Click here to read the Yahoo! Finance article about Social Security solvency.
As an example of leading thinking on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized to serve future generations. AMAC’s position is that this can be achieved without payroll tax increases through relatively minor program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating initial benefits for higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) changing the taxable maximum formula to address the unintended loss of revenue; (4) improving survivor benefits, (5) eliminating the reduction in benefits for those choosing to work before full retirement age; and (6) improving savings tools for future retirees, including a savings account that builds estate value. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade. See AMAC’s proposal for Social Security reform here.