The current state of Social Security and something to consider in your planning

My view is that nothing will be done to fix the funding of Social Security through 2028 thus leaving people with concern for their future and to ponder rumors and misinformation. The latest report from the Trustees that should have been released by now is not available yet, but here is a summary from the last in 2024.

My opinion is to be conservative when planning your retirement in the next few years, and use 80% of your current projected Social Security benefit. I still don’t think it will come to that, but then again a didn’t think a lot of things in the political arena could happen, but have. 

Better to be extra conservative in your planning for now instead of creating your own crisis later. 

The projected actuarial deficit for the combined trust funds over the next 75 years is 3.50% of taxable payroll. So, raising the payroll tax by 1.75% on employer and worker gets the job done. That comes to about $20.90 per week based on BLS median worker earnings data. 

Summary from latest Trustee report:

“• The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year’s report. At that time, the fund’s reserves will become depleted and continuing program income will be sufficient to pay 79 percent of scheduled benefits. 

• The Disability Insurance (DI) Trust Fund is projected to be able to pay 100 percent of total scheduled benefits through at least 2098, the last year of this report’s projection period. Last year’s report projected that the DI Trust Fund would be able to pay scheduled benefits through at least 2097, the last year of that report’s projection period. 

• If the OASI Trust Fund and the DI Trust Fund projections are combined, the resulting projected fund (designated OASDI) would be able to pay 100 percent of total scheduled benefits until 2035, one year later than reported last year. At that time, the projected fund’s reserves will become depleted and continuing total fund income will be sufficient to pay 83 percent of scheduled benefits.”

Note that combining the two funds extends the crisis date, but fixes nothing.  Congress previously used a bandaid by transferring assets from the disability fund to the Old Age fund.