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Understanding Social Security: Whether It Will Be There, and What It Means for You
Few topics in retirement planning generate as much confusion—or concern—as Social Security. As we move into 2026, clients often ask the same three questions:
- When Should I collect?
- Will it still be there when I retire?
- What does it mean for my financial plan?
What Is Social Security?
Social Security is a federal program that provides a base level of income in retirement. It also offers benefits in the event of disability or for surviving spouses and dependents. For most retirees, it serves as a foundational income source—not a complete retirement solution, but an important building block of a stable plan.
Your benefits are based on your highest 35 years of inflation adjusted earnings and the age at which you start receiving payments. Key ages include:
- Age 62: Earliest age to begin collecting Social Security retirement benefits
- Age 67: Full Retirement Age (FRA) for most current workers
- Age 70: Latest age to delay benefits for increased payments
Additionally, Social Security benefits are adjusted annually for inflation through a Cost-of-Living Adjustment (COLA). In 2026, beneficiaries received a 2.8% COLA, showing how Social Security helps maintain purchasing power under current law.
How Is Social Security Funded?
Social Security is primarily a “pay-as-you-go” system, funded through payroll taxes under the Federal Insurance Contributions Act (FICA):
- Employees: 6.2% of wages
- Employers: 6.2% of wages
- Self-employed individuals: 12.4% of earnings
Payroll tax revenue is projected to cover roughly 75%–80% of scheduled benefits. (Social Security Trustees Report, 2025). The remainder comes from the Social Security Trust Fund, which has been built up over decades. As Baby Boomers retire, these reserves are being drawn faster than they are replenished.
Will Social Security Be There in the Future?
Even if the Trust Fund is depleted in the early-to-mid 2030s, payroll taxes would likely still fund 75%–80% of scheduled benefits. (Social Security Trustees Report, 2025).
Historically, Congress has acted to address shortfalls before benefits were reduced. Many analysts expect that a combination of policy adjustments—rather than elimination of the program—will support its long-term viability. Commonly discussed options include:
- Increasing the taxable wage base: Raising or modifying the $184,500 cap so higher earners contribute more
- Adjusting the retirement age: Gradually increasing Full Retirement Age for future retirees
- Modifying benefit formulas: Slowing benefit growth for higher-income earners or adjusting COLA calculations
- Raising payroll tax rates: Small, phased-in increases could improve long-term funding. Some analysts estimate that an increase of approximately 4% in payroll taxes could help extend program solvency for several decades (Congressional Budget Office, 2024).
What Does This Mean for You?
Social Security is a critical part of retirement planning—but it should not be your only source of income. Key considerations include:
1. A Durable Income Foundation - Benefits are designed to be payable for life and adjust with inflation, helping provide long-term income. They offer stability, especially if you live longer than expected.
2. Claiming Age Matters - Deciding when to claim Social Security is a permanent decision. For each year benefits are delayed beyond Full Retirement Age (up to age 70), monthly payments increase by approximately 8% per year under current rules. The best strategy depends on your other income sources, savings, overall health, and retirement goals.
3. Planning for Policy Uncertainty - Because future reforms are possible, it’s important to consider different scenarios:
- Partial benefit reductions in the 2030s
- Lower-than-expected COLA adjustments
- Impact of delaying benefits to age 70
Claiming Social Security is a permanent decision with long-term implications. As part of a comprehensive retirement plan, it’s important to coordinate benefits between spouses, integrate Social Security with tax-efficient withdrawal strategies and other income and assets, and consider the potential impact of future policy changes.
The Bottom Line
A successful retirement plan is flexible and resilient. Social Security remains a central part of the U.S. system. While discussions about funding and policy changes continue, the program is widely expected to continue in some form.
A comprehensive financial plan can help integrate Social Security with your savings, investments, and other income sources—helping you prepare for future changes. Start planning today—schedule a consultation to see how Social Security fits into your personalized retirement strategy by clicking here.