But do keep track of Congressional activity

That famous 1897 quote from Mark Twain, “The report of my death was an exaggeration,” seems to appropriately describe the current state of Social Security. For several years now, headlines have run rampant that Social Security is going bankrupt, running out of money, or can no longer be relied on during retirement.

These rumors, myths, hype, and hoopla are all false. Even worse, they scare pre-retirees, leading too many to claim benefits too early. And locking them into a financial disadvantage.

But something is going on with Social Security. And fixes are needed. But to say the program is on its last leg…that’s just premature.

The Social Security Trust Fund is NOT going bankrupt

Over one trillion dollars fuels Social Security each year. And will continue to do so as long as we have workers who earn wages. In 2025, some $1.248 trillion flowed into the Trust Fund:

• Payroll taxes on each covered worker’s wages accounted for $1.13T,
• Interest on the reserve account added $61.7B, and
• Taxation of benefits on higher-income retirees was $56.4B.

It’s critical to understand two key facts about Social Security. First, Social Security is a law and only Congress can change it. And second, the law allows only those three sources of revenue to fund its obligations.  It’s a closed-loop accounting system in jeopardy of meeting 100% of retirees’ benefits starting in 2032.

General Tax Revenue Cannot Fund Social Security

The Social Security law clearly delineates the revenue sources allowed in this “pay-in” to receive a “pay-out” system. At this time, the Treasury cannot simply route general tax dollars into the Trust Fund to meet obligations. Nor can the Trust Fund take on debt.

That leaves incoming revenue largely dependent on payroll taxes. Between 80% and 90% of Social Security’s revenue comes from payroll taxes. Employers and workers each pay in 6.2% of wages up to a salary cap of $184,500.

A growing number of tax filers owe income tax on up to 85% of their Social Security benefits if they have a “combined Income” that exceeds certain thresholds. Married couples filing jointly start paying taxes when their combined income exceeds $32,000; individual filers are taxed at $25,000 or more.

(Combined income is AGI + non-taxable interest + ½ gross Social Security payments.)

The third revenue stream is the interest earned on the reserve account. Think of this account as a savings account. It collected the surplus revenue from prior years in anticipation of the Boomer generation reaching retirement age.

Where Is the Problem if Revenue Exceeds $1 Trillion?

The problem with the Trust Fund is twofold: There are fewer workers paying in relative to retirees receiving benefits. And the reserve account, with a balance of $2.3T today, is being tapped to meet the full benefit obligations for today’s retirees. It is projected to be fully depleted by Q4 2032. And the associated interest revenue will also end.

Recipients of the Old Age and Survivor’s Insurance (OASI) program are retirees, spouses, qualifying family members, and survivors. In 2025, OASI outflows totaled $1.448T, exceeding inflows by $200B. Therein is the math problem.

When Did Congress Learn about This Problem?

In 1992. Yes, 34 years ago.

In 1983, during the Reagan Administration, sweeping Social Security Amendments were signed into law. Changes included increasing the Full Retirement Age (FRA), taxing benefits, and accelerating payroll tax increases to ensure a 75-year solvency run.

But by 1992, Congress knew that the changes implemented were insufficient. The reserve account in the combined OASI and Disability Insurance (DI) Trust Funds was projected to be depleted in 2036. In 1994, the OASI reserve fund itself had a projected depletion date of 2036, and in 1995, a depletion date of 2031.

Consumers Are Reacting Out of Fear and Misunderstanding

Instead of reading the fine print of the Social Security law to understand the funding situation, many early retirees are taking actions that may not be in their long-term best interest.

Of concern: the nearly two-thirds of retirees claiming benefits before their FRA, (age 67 for most), locking in a permanent reduction in monthly payments.

• 26% of men and 29% of women claim at age 62, locking in a 30% reduction
• 59% of men claim before their FRA
• 62% of women claim before their FRA

In some cases, claiming early is the necessary action. But mostly people are claiming early because they don’t understand the program:

• They think Social Security is going bankrupt and they want to get some of what is theirs.
• They want to be “grandfathered in” if Congress fails to act and allows the reserve account to be fully depleted.

Again, Social Security cannot go bankrupt. And there is no grandfathering allowance in current law. All beneficiaries would see about a 22% cut to their benefits.

Congress Is Talking About Social Security

The fear is real. The reserve account is on a path to be fully depleted by 2032. And the only way to fix Social Security’s problems is for Congress to work together to amend the law. Since the release of the 2025 Trustees Report in June, members of Congress have been talking. They are finally starting to feel some heat and urgency.

So far, the Senate Finance Committee has held two hearings and both houses have proposed convening a committee to make recommendations.

Several Senators have proposed specific changes to be implemented before a larger bill. One proposal lifts the taxable wage base so that all workers pay FICA on 100% of their salaries.

Once again, the Social Security 2100 proposal has been re-proposed. It has been introduced in each Congress since 2019 and was built on prior similar proposals. It includes small increases to payroll tax rates, imposes FICA on wages over $400k, changes the COLA base index, etc.

Furthermore, the bipartisan Committee for a Responsible Federal Budget (CRFB) has issued a series of “novel” solutions that, together, could raise revenue while maintaining the original promise of keeping our oldest Americans out of poverty.

The idea of raising the retirement age has been touted as a fix. But for blue-collar workers—about 45% of workers—it means a significant cut in benefits, as most cannot physically work until 68 or 69.

The CRFB’s creative proposals include:

• Capping the annual COLA increases for the top 25% beneficiaries to a fixed dollar amount.
• Applying FICA to all compensation, not just to W-2 wages.
• Limit the dollars payable to high-income retirees to $50,000 and married couples to $100,000.

There are many creative and viable proposals to solve Social Security’s math problems already on the table. Expending political capital and working out a compromise will take more time. Nevertheless, there are many reasons to feel more confident that Social Security will be here for the long run.

Don’t count this 90-year-old program out just yet.