Social Security Insolvency: The News Got Worse - Motley Fool
Many Seniors are already on edge about Social Security! If you pay attention to public media, you are surely aware that the Social Security Trust Funds are forecasted to run dry soon. Last year’s projection by the Trustees of the SS program predicted the SS Trust Funds would be fully depleted as early as 2034. But, according to the Congressional Budget Office (CBO), some things have happened to make that expected problem occur even sooner.
The CBO most recent analysis projects that the Trust Funds will be depleted in about the year 2032, sooner than previously projected, exacerbated by:
- The Social Security Fairness Act, signed in early 2025, which eliminated the Windfall Elimination Provision and the Government Pension Offset, increasing the Social Security benefits of many Americans (more money flowing out of Social Security).
- The One Big Beautiful Bill didn’t eliminate taxation on Social Security benefits as many had expected. But it did create a new, enhanced $6,000 standard deduction for seniors ages 65 and older, effectively lowering the income on which many seniors are taxed (including some of their Social Security benefits). Tax on benefits is a significant source of income for Social Security (about $55 billion in 2024).
- The CBO now expects inflation to be a little higher than previously predicted, which means higher Social Security COLA payments starting next year.
In other words, Congressional action in the past couple of years has accelerated Social Security insolvency date at a time when program reform is urgently needed. But all is not lost, because Congress can still reform Social Security to avoid the benefit cuts which will occur if the Trust Funds are depleted. But Congress must act soon, as explained in this Motley Fool article by Selena Maranjian.
For it’s part, the Association of Mature American Citizens (AMAC) has been working on this SS solvency issue for several years. As an example of leading thinking on reforming Social Security, AMAC 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.