Social Security Trustees recently warned that the nation’s largest and most important retirement program is only six years from insolvency, and its already massive projected shortfall has grown by 16%.Yet as the 2026 midterm elections approach, almost no one is talking about Social Security’s looming crisis. The trust fund is slated to run out of money while the next class of senators is still in office.That no candidate in either party is running on a plan to save Social Security is leadership malpractice, and we will all suffer. Perhaps novel trust fund solutions can break the logjam.
Social Security is the bedrock of the U.S. retirement system. Over 70 million Americans currently collect Social Security’s retirement, disability, or survivor benefits, and more than 230 million more expect to receive those benefits when they are needed. The 90-year-old program is internally financed by a 12.4% payroll tax split between worker and employer on each worker’s first $184,500 of income, with current taxes supposed to pay current benefits.Unfortunately, those taxes are currently falling short. As the U.S. population has gotten older – due to both rising life expectancy and falling birth rates – payroll tax revenue just hasn’t kept up with rising costs. Since 2010, Social Security’s costs have exceeded its revenue, and in just six years, the reserves built up in the 1990s and early 2000s will be depleted.That’s when the crisis hits.Under the law, Social Security cannot pay out more than it collects in revenue – and the gap is quite large. Based on the latest projections, retirees will face an immediate and abrupt 22% benefit cut. For a typical couple retiring in 2033, that would amount to $16,900 in lost annual benefits. For low-income retirees and the very old who count on Social Security, this cut would be absolutely devastating. And it gets worse from there — the size of the cut will grow to 38% by the end of the century.An issue lawmakers would rather avoid
