Retirement Income: Is Social Security Broke?

It won’t be long before financial journalism finds a new story about Social Security ‘running out of money.’

Following the false reports of “no tax on Social Security” (not true).

The Social Security Act requires the Trustees to report each year to Congress on the financial and actuarial status of the trust funds. The most recent Report in June 2025 was followed by headlines declaring, “Social Security is “running out of money.”

The latest Trustees Report deserves attention but not panic. Revenue coming in will fall short of funds required to pay current benefits by 2033 unless action is taken to bolster the program.

Ongoing program income would then be enough to cover about 81% of scheduled benefits. That does not mean benefits disappear. It means full scheduled benefits are not supportable unless Congress acts. This is not a cliff; it’s a policy deadline.

Fixes have been studied and proposed for years, but the political will needed to make changes has been in woefully short supply.

For many retirees, Social Security is not just another monthly deposit. It is core income - the part of retirement cash flow that shows up whether markets are calm or chaotic. Social Security remains one of the very few income sources that is both guaranteed for life and adjusted for inflation. Most pensions and annuities are fixed, with level income and purchasing power that erodes with time. Dividend income can change. Bond income matures and rolls. Social Security is different.

The Program could be stabilized with proposed changes: raise payroll taxes gradually, lift or broaden the wage base subject to tax, push full retirement age higher for younger workers, trim future benefits for higher earners, or use some blend of these changes. Washington still has many knobs to turn.

For married couples, it provides survivor protection. When one spouse dies, the surviving spouse generally keeps the higher benefit. That makes the claiming decision of the higher earner more important than many families realize. Delaying a larger benefit can strengthen the surviving spouse's lifetime income by a considerable amount.

There is also an inflation point here that investors sometimes miss. The 2026 cost-of-living adjustment is 2.8%. That might not feel exciting, but it is valuable. A modest inflation adjustment, applied year after year to lifetime income, is one of the quiet strengths of Social Security. Most retirees do not have that kind of income leverage elsewhere.

Start planning early. Use the Social Security Administration website, including its Questions and Answers pages, but verify what you hear. The rules are technical, and not every answer people receive is applied cleanly or accurately to their facts. Model the claiming choice in the context of the whole plan: life expectancy, spousal benefits, work income, taxes, and the role Social Security plays in core income. The goal: decide what this income must do for the rest of your life.