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Our colleague and MFA founder Susan Moore contributed the following update on Social Security

As financial advisors, a frequent concern we hear from clients revolves around the future of Social Security benefits. Many are understandably worried about whether these benefits will be available when they retire, especially amidst reports of potential funding shortfalls.

We’ll share below the latest projections for Social Security funding and then explore the measures being proposed to ensure its long-term viability.

Current Projections for Social Security

The Social Security program is primarily funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA). However, demographic shifts such as declining birth rates and increasing longevity are leading to fewer workers supporting more retirees, which puts a strain on the system.

According to the most recent Social Security Trustees Report, the Social Security trust funds are projected to be depleted by 2035, one year later than projected in last year’s report, if no changes are made.

At that point, incoming payroll taxes will be sufficient to pay 83% of scheduled benefits. This projection highlights the need for reform to ensure that full benefits continue to be paid.

Proposed Measures to Strengthen Social Security

Several measures have been proposed by policymakers to address the funding challenges faced by Social Security. These proposals typically fall into three categories: increasing revenue, reducing promised future benefits, or a combination of both. Here are some of the most discussed options:

Increasing Revenue

  • Raise the payroll tax rate: One proposal is to increase the payroll tax rate, which is currently 12.4% (split between employers and employees), to bring more funds into the system.
  • Lift the payroll tax cap: Currently, payroll taxes are not collected on incomes above a certain threshold ($168,600 in 2024). Removing or increasing this cap could significantly boost Social Security’s funding.
  • Introduce new revenue streams: Some have suggested introducing new sources of income for the trust fund, such as taxes on certain types of unearned income.

Reducing Benefits

  • Increase the full retirement age: Gradually raising the age at which retirees qualify for full benefits could reduce the system’s expenditures.
  • Modify the cost-of-living adjustments (COLA): Tying COLA to a different index that grows more slowly could decrease the annual increase in benefits, thus saving money over time.

Combination Approaches

  • Means testing: Reducing benefits for high-income retirees could help focus resources on those most in need.
  • Balanced approaches: Some proposals suggest a balanced approach that includes both modest tax increases and benefit reductions, aiming to spread the impact across different demographics and income groups.

One thing that’s important to note: all of the proposed measures described above would impact future Social Security recipients.

None of the measures that we have seen (except for the possible limit on the annual COLA) propose changes to benefits for those who are already receiving Social Security benefits.

What This Means for You

For individuals planning for retirement, the uncertainty surrounding Social Security underscores the importance of retirement planning. Depending on Social Security alone for retirement income is increasingly risky.

Here are a few strategies to consider:

  • Increase Personal Savings: Boost your personal savings rate and maximize contributions to retirement accounts like IRAs and 401(k)s.
  • Maintain a financial plan: We work with our clients to develop their financial plans and to update those plans to ensure that they’ll be able to reach their goals and can look forward to a sound financial future.
  • Stay Informed: Keep abreast of changes to Social Security legislation and consider how these might impact your retirement planning. And don’t hesitate to let your congressional representatives know what you think!


While the challenges facing Social Security are concerning, especially for those who have not yet retired, remedies are being considered.

With comprehensive financial planning, we can help you prepare for a variety of future scenarios. As your financial advisors, we are here to help you navigate these uncertainties and develop a retirement strategy that ensures your financial security, regardless of what the future holds for Social Security.