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A retired actuary name Ken Steiner has a article today, 8/4/2026, titled Social Security’s Short-Term Crisis, published on Advisor Perspectives.
I like Mr. Steiner’s thinking on breaking the funding or reduction of the future social security shortfall problem into short and long components. His discussion of one alternative is a three-year COLA freeze starting around 2033. If you are part of the grandfathered group who is receiving a current social security benefit you may want to consider this possibility in your planning.
I know this is a topic that Humble Dollar tends to beat to death but part of this article’s conclusion – Congress will need to act quickly to address Social Security’s short-term financing crisis. Benefit cuts, COLA freezes, revenue increases, or some combination of these are all possible has my thinking focused on a future COLA freeze as part of my planning.
As someone who, with my father, has been looking at Social Security’s projected benefits for nearly 40 years, I will point out that there is a great deal of uncertainty in the trustees report. In fact, the trustees report has three projections that they give every year. An optimistic one, a most likely case and a pessimistic one. Everybody focuses on the pessimistic case. Do you want to tell me what the Interest rates are going to be for the next 75 years? What about inflation over the next 75 years? We do need to worry about Social Security payments, but it’s only really a short term issue. By the mid 2070s, the baby boomers will have died off and will be taking far fewer benefits from Social Security. The current actuary tables actually say that we will get back to a surplus around then.
Another possible solution is to allow Social Security to do what the rest of the government does and borrow money to fund its current obligations. While we will be in negative territory for 35 or 40 years, we will get back to being in a surplus. If we don’t borrow the money for Social Security, the government will just borrow the money for some other purpose.
SS wouldn’t need COLA’s if the inflation rate was zero, or even better, less than zero (deflation, the money gains more value). I know to a lot of people deflation is a dirty word but it shouldn’t be. Deflation is just taking excess money out of circulation which used to happen after every recession.
You can’t keep printing money forever which the Fed has been doing since 2008.
with $40 trillion of debt we will have deflation when pigs fly.
Deflation isn’t just “taking money out if circulation.”
Deflation also tells consumers “don’t buy now, wait it will be cheaper tomorrow.” And consumers respond, and the economy contracts.
Our last significant bout of deflation was the Great Depression. I’m not anxious to revisit those days.