Social Security: What’s Going On — and What Could Be Done

Derrick Alexander |
Categories
Retirement

Social Security: What’s Going On — and What Could Be Done

 Why This Matters to You

Whether you're retiring in 5 years or 25, Social Security plays a role in your long-term income. While you may hear alarming headlines, the truth is more balanced — and knowing the facts helps you plan wisely.

Let’s Start With all of the players

Term

What It Means

Social Security (OASDI)

Government benefits for retirees, survivors, and those with disabilities. Funded mostly by taxes.

OASI Trust Fund

Supports retirement and survivor benefits.

DI Trust Fund

Pays disability benefits.

FICA / Payroll Tax

The 6.2% tax taken from your paycheck (your employer matches it) to fund Social Security.

  

COLA

Cost-of-Living Adjustment – an annual increase in Social Security to keep up with inflation.

Where Things Stand Now

  • The OASI Trust Fund is expected to run out of reserves in 2033.
  • Even if that happens, Social Security will still pay about 79% of scheduled retirement benefits.
  • Why? Most benefits are funded directly by payroll taxes, not just the trust fund. Please see the example below

In 2024:

  • $1.3 trillion came in from payroll taxes
  • $1.4 trillion was paid out in benefits
  • The difference was covered by interest on reserves and some withdrawals(55 billion from taxes on benefit and 69 billion from Interest on Trust Fund Investments)  

What’s the solution?

Here are a few possible solutions being discussed:

1. Increase Taxes (More Money In)

  • Raise the payroll tax by 3.33%
    • Example: A $75,000 household would pay about $2,500 more per year
  • Remove the income cap ($168,600 in 2024) so high earners pay more
  • Combination approach: Small tax increase + higher wage cap

2. Reduce Benefits (Less Money Out)

  • Cut everyone’s benefits by ~21%
  • Or only reduce future retirees’ benefits by ~25%
  • Raise the full retirement age from 67 to 68 or 69
  • Slow down benefit growth for high earners
  • Adjust how inflation is calculated (COLA changes)

Even if no action is taken, you'll still receive the majority of your benefit.
But — just like any responsible household — adjustments will likely be made to keep Social Security sustainable.

Past reforms (like in 1983) weren’t made until the very last minute… but they did work.

At Greater Wealth, we monitor these updates so you don’t have to worry.
Social Security is one part of your retirement strategy — not the only one.
We’ll make sure your plan stays on track no matter what Washington decides.