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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.
Ive followed Ken Steiner’s blog for several years-howmuchcaniaffordtospend inretirement as I have appreciated his actuarially-based articles combined with practical solutions and thought leader approach, Here is a link to the companion piece to the Advisor Perspective’s article in which he proposes a progressive cap on SS COLAs. How Much Can I Afford to Spend in Retirement?: A Progressive COLA‑Cap Approach for Strengthening Social Security’s Finances
Social Security and its future is commonly discussed here, and rightly so. Yesterday’s newspaper included an op-ed piece credited to the Las Vegas Review-Journal. Evidently, a group of 8 senators (3 democrats, 4 republicans, 1 independent) have put forth something called the Promise Act.
This proposal “directs the Social Security Advisory Board to hold public meetings intended to gather input about possible reforms to fortify SS and then develop legislation for both House and Senate consideration”. It also notes “the purpose is to get members on the record one way or the other as older adults face threatened benefit cuts if structural deficiencies of SS aren’t addressed”.
Since all I know about the Promise Act is based on a relatively short op-ed, I need to do some further reading about it. I just believe that for a long time, there has been little or no information in the news about legislative activity to keep SS alive and well. So, this Promise Act may be the start of something good.
UPDATE: please understand I am referring to The PROMISE Act (Protecting Retirement Opportunities and Maintaining Income Security for Everyone Act) rather than the similarly named American Dream and Promise Act.
For those young enough to begin to plan accordingly, the best long term plan when it comes to Social Security is to plan on ZERO benefits. None of all this anxiety is new. The projections have been dire for decades particularly for those on the latter part of the Baby Boomer Demographic. Nothing substantive will be fixed near term or “after 2028” for that matter. We’ve heard that all before. The dented, rusty can will just get kicked down the road again right into your future retirement.
This is all the more reason that for those young enough and with the means to begin to plan accordingly; I strongly recommend assuming ZERO benefits as I did four decades ago. The freedom from the angst of relying on what entrenched, elected officials decade after decade will do to your income is simply not worth the relatively small benefits that Social Security provides. A suitably sized, diverse portfolio you manage yourself is the pathway out of this decades long morass and into an optimistic retirement.
If you end up getting anything out of the system decades from now, you can be pleasantly surprised and consider it a bonus vs something you depend on and worry about.
There are several ideas floating around to change the application of the COLA. One idea is to cap the COLA at the median calculated amount. That would protect the lower 50% of beneficiaries and limit a dollar amount for the higher income folks.
Adjusting the COLA is one relatively painless way to help SS sustainability and would not be that objectionable to many as it targets higher income retirees.
If I were planning retirement I would not count on any SS COLA in my plan just to be safe.
Mr. Quinn’s advice is interesting, and potentially seismic. Every major financial writer (Jonathan, Christine Benz, etc.) says to consider SS payments as the only automatic inflation-adjusted investment available for most folks. Pensions, annuities, stocks, bonds (save for TIPS), cash – all have uncovered inflation risk. Social Security’s inflation adjustment is fundamental to the retirement plans of most people. To take that out of a plan changes, well, everything. . . .
I am planning for changes after 2032. I am unsure what I have done for my family will be sufficient.
I am not optimistic any government action will be put in place until after the social security trust fund is just nearly or fully depleted.
But wait.
When I started working as an adult in 1980 the deal was I could retire with full benefits at 65. Then in 1983 the government changed my retirement age to 67 (an effective cut of 13.3% per AI). At that time they began taxing benefits which they hadn’t previously, and raised the Social Security tax rate.
Now after 45 years of paying into a system that told me I was essentially getting an inflation adjusted payout, they’re considering reneging on that? Also if the funding system is not modified I could be facing a 20-24% cut in benefits?
What a bait and switch has been perpetrated on the late baby boomers!
It’s not going to be any different for younger workers. They will either pay more than the boomers for the same benefits if taxes go up, or will receive fewer benefits for the same level of taxation, or worse fewer benefits and higher taxes.
Hey Adam,
What you wrote was exactly the point I was getting at. We have already made multiple financial sacrifices since we began our journey to retirement which depended a lot on what we were promised from Social Security. At this point I do not believe it would be fair to cut our benefits more, no matter our wealth. We were told when we began working what the deal was, then they changed it. It was early enough that we could make changes to our financial plans to accommodate the changes. But a this point we should get what we’re were told we were getting after contributing for decades. Those who were already, or close to retirement age were not subject to benefit cuts from the 1983 law, and neither should we. We have already made financial sacrifices to get us to this point in time. Enough is enough. If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.
I was somewhat lucky, I guess. In 1985 in the spring of my senior year of high school, our government teacher told us we were a unique group of students in that we would be the first to not receive social security because it was on an unsustainable path. As a result, I kept informed over the years and planned my retirement on the assumption I would never see SS.
My point is that this situation was foreseeable 40 years ago if you were paying a little bit of attention. The older generations can blame the government all they want, but in the end the people who are responsible are the ones who voted for them at the time. Putting the burden on a smaller and younger generation who weren’t even alive when these decisions were made strikes me as selfish and irresponsible.
My statement,”If there are going to be further cuts in benefits and raises in taxation let younger people who have time to adapt their financial plans be the people to sacrifice to ensure their future beyond, just like we were asked to do in the past.”, is that the above changes would secure our promised benefits and those of younger generations. We had to sacrifice a significant amount from when we first started, so why not younger generations?
David, I can relate to your thoughts. During my working years, I planned my retirement without regard to what my SS benefit would be. I have pretty much given up on our elected officials to properly address this problem, which is why I chose to receive my benefits earlier rather than later. I’ll take 100% of my payment now at a smaller amount for a longer time as opposed to waiting and having it cut by 25% for fewer payments. Plus I live in a state that does not tax SS, but does tax my IRA withdrawals.
And it will continue to beaten to death for the simple reason that we all know its future financial stability is in jeopardy, yet so far Congress has not taken action. Which leaves all of us having to not only deal with the uncertainty of how our investments may fare, but now also the uncertainty of what we all used to assume was the one thing we could count on.
Thanks for a good article and also the link to Steiner’s.
A large part of my financial plan was delaying claiming Social Security until 70 to get the largest possible inflation adjusted payments. Now they are mulling changing the rules again, and saying well…?
So if they adopt to freeze COLA increases, I wonder if they will also freeze increases to the standard monthly premium for Medicare Part B.
Sardonically, Probably not!
Two very different things. The premium directly reflects 25% of the nexts years anticipated medical claims and while there is technically a Part B trust, it can’t be depleted because unlike Part A and SS trusts, transfers from general revenue always keeps it going.
So, not raising the premium means raising the deficit.
But reducing SS payments may reduce IRMMA for some. Where does the IRMMA payment go?
Interesting question Robert that sent me down a rabbit hole.
Using the CMS 271 page report with a transmittal letter of June 9, 2026 titled “THE 2026 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE (SMI) TRUST FUNDS” the best answer I can find appears to be that the IRMAA contributions are not broken out from the approximate 22% of total revenues that come from beneficiary premiums.
Page 13 reads in part –
For SMI, government contributions represent the largest source of income. These contributions covered about 75 percent of program costs in 2025. Also, beneficiaries pay monthly premiums for Parts B and D. Those premiums financed roughly 22 percent of the total cost in 2025…
In past years when the SS COLA was 0% a hold-harmless provision in the Social Security Act (§1839[f]) resulted in net benefits not decreasing as a result of an scheduled increase in the Part B (but not Part D) premium but there are some existing exceptions where the hold harmless provision do not apply.
There is certainly nothing to stop the hold harmless provision in the Social Security Act from being being changed by congress.
That would harm lower income retirees the most. I don’t see that happening. When changes are made – after 2028 I’m pretty sure they will target higher income retirees and future retirees.
The current ideology of those in charge does not allow changes because the thinking is that a growing economy and incomes plus fixing fraud and waste will resolve the issue. That is wrong of course and represents a lack of understanding of the fundamental demographic problem.