What the former deputy commissioner wants you to know about Social Security

Every time Social Security hits the headlines, my inbox fills up with some version of the same questions: “Is Social Security going bankrupt?” “Will my benefits be cut?” “Should I just grab it at 62 before it’s gone?”

So I dug into what someone who actually helped run the program has to say about all of this. The short version: Social Security is not going bankrupt—but we are on a clock, and what happens next will affect how you plan your retirement.

Is Social Security going bankrupt?

No. That’s the single biggest misconception out there.

Here’s what’s really happening. Social Security has trust funds that hold extra money built up over past decades. If Congress does nothing, the main retirement trust fund is projected to be depleted around 2032–2033.

“Depleted” does not mean “gone forever.” It means the program will no longer have that extra cushion. At that point, Social Security can still pay benefits from the payroll taxes workers and employers are paying in, but that would only cover about 78% of the promised benefits.

So the rough “do nothing” outcome is: benefits get cut automatically to around 80%, not to zero. That’s a serious problem, but it’s not bankruptcy.

How worried should you be if you’re in your 50s or 60s?

If you’re in your 50s or 60s, you don’t need to panic—but you also shouldn’t ignore what’s going on.

Most serious reform proposals in recent years have tried to “hold harmless” people who are already retired or close to retirement (often age 50–55 and up). That doesn’t guarantee nothing will ever touch your benefits, but it does make large, sudden cuts for current retirees very unlikely.

What’s more realistic is something like this:

• Your base benefit amount stays intact, but future cost-of-living adjustments (COLAs) grow a bit more slowly than they would have otherwise.
• Higher-income retirees may see more of their Social Security benefits taxed.

So if you’re nearing retirement, plan as if Social Security will be there—but be conservative. Don’t build a plan that only works if every future COLA is generous and nothing ever changes.

What if you’re in your 30s or 40s?

If you’re younger, the odds that you’ll see actual changes to the rules are higher. That might mean:

• A higher “full retirement age” (for example, 69 or 70 for today’s younger workers).
• Higher payroll taxes over your working years.
• More benefit taxation if you have higher income in retirement.

But again, that’s different from Social Security disappearing.

The key mindset shift is this: think of retirement as an income problem, not a “how big can I make my account balance?” problem. Your job in retirement is to replace your paycheck in a sustainable way. Social Security is one piece of that paycheck—on average, it’s designed to replace roughly 30–40% of your pre-retirement income.

That means you’re responsible for building the rest through:

• Employer plans like 401(k)s and 403(b)s
• IRAs and other personal savings
• Any pensions or other guaranteed income you’re lucky enough to have

The earlier you start, the more you can lean on compounding instead of panic. Even small, consistent contributions in your 20s, 30s, and 40s can add up to a meaningful supplement to Social Security later.

How much of your income is Social Security meant to replace?

Social Security uses a progressive formula: it replaces a higher share of income for lower earners and a lower share for higher earners. On average, it’s built to cover about 30–40% of your pre-retirement income.

For married couples, it can feel like it replaces more—sometimes 50–60%—because of spousal and survivor benefits. That’s part of why some reform proposals talk about capping benefits for very high-income households, especially married couples with two large benefit checks.

But for planning purposes, I’d treat Social Security as your income floor, not your whole retirement plan. Your goal is to build additional income streams on top of that floor.

When should you claim Social Security?

You can claim as early as 62 or as late as 70. Your “full retirement age” (FRA) if you were born in 1960 or later is 67—but that phrase is misleading. It’s not really the “right” age; it’s just the age at which you get the benefit formula you’ve earned, without early-claim reductions or late-claim increases.

Here’s what the math looks like if your FRA is 67 and your benefit at that age would be $1,000 per month:

• Claim at 62: about $700/month (a 30% permanent reduction).
• Claim at 67: $1,000/month.
• Claim at 70: about $1,240/month (a 24% permanent increase over FRA).

The difference between claiming at 62 and 70 is huge—a roughly 77% increase in your monthly check if you wait. And those higher benefits are inflation-adjusted for life.

I like this simple rule of thumb: take Social Security when you need it, and not a day before.

Good reasons to claim earlier might include:

• You physically can’t work anymore and don’t have other income.
• You have very limited savings and need the cash flow.
• You have serious health issues and don’t expect to live into your late 70s or beyond.

Bad reasons to claim early:

• “I’m scared Social Security won’t be there.”
• “A break-even calculator said I’m ‘ahead’ if I claim early and die by age 76.”

Those break-even analyses are sneaky. They tell you how long it takes for waiting to pay off, but they rarely emphasize the flip side: if you live past that break-even age, you’re behind for the rest of your life.

Stop treating Social Security like an investment

This is another mindset shift I really agree with: Social Security is not an investment you’re trying to “beat.” It’s insurance—specifically, insurance against running out of money in old age and against disability.

We’ve all been trained by 401(k)s and IRAs to think in terms of account balances, returns, and “maximizing growth.” That mindset is great during your working years. But once you’re approaching retirement, the game changes from wealth accumulation to wealth preservation and income.

With Social Security, the question isn’t “How do I get every last dollar out of the system?” It’s “How do I use this guaranteed, inflation-adjusted income to build a safe floor I can’t outlive?”

What changes are most likely for Social Security?

No one knows exactly what Congress will do, but there are some very likely ingredients based on the math and the politics:

• Some kind of revenue increase. The most obvious lever is raising the payroll tax rate slightly. For example, moving from 12.4% (split between you and your employer) to something like 14.4% over time.
• Changes to COLAs. Instead of cutting existing checks, Congress may slow the growth of future cost-of-living adjustments. You’d still get raises, just a bit smaller than under current law.
• Higher retirement ages for younger people. When the full retirement age was raised from 65 to 67 in the 1980s, it was phased in over more than 30 years. We could see something similar again, with younger workers eventually facing a full retirement age of 69 or 70.
• Higher taxable wage cap. Right now, only wages up to a certain amount are subject to Social Security tax. That cap could be raised so that a higher share of national wages is taxed.
• More taxation of benefits for higher-income retirees. Instead of cutting their checks directly, Congress may simply tax a larger share of their benefits when they file their tax returns.

What’s much less likely? Letting checks stop or cutting everyone’s benefit by 20% overnight. That would be political suicide, which is why, even if Congress drags its feet, they’re likely to at least pass short-term “bridge” fixes before that happens.

What about “just tax the rich” fixes?

In polls, the most popular answer is always some version of “just lift the cap and tax high earners more.” It’s popular partly because most people don’t earn above the cap, so it feels like a tax on “someone else.”

Fifteen years ago, simply eliminating the cap might have solved the 75-year shortfall. Today, the gap is bigger. Even eliminating the cap outright doesn’t fully fix the problem anymore, depending on how benefits are handled for those higher earners.

On the other side, some argue we can fix everything with benefit cuts alone. That’s also unrealistic. It’s hard to imagine any Congress voting for an across-the-board 20% benefit cut on current retirees.

The sober, boring answer: we’re going to need a mix of revenue changes and benefit changes, phased in over time.

If you want to go deeper on the tax side of things, I’ve written about what a Social Security tax hike could mean for your paycheck and retirement in this article.

Could borrowing be part of the fix?

This is one area where opinions have shifted. A decade or more ago, many experts hoped we’d fix Social Security without borrowing, simply by tweaking taxes and benefits early. We didn’t do that.

Now that we’re much closer to the trust fund depletion date, some form of short-term borrowing is more likely as a “bridge” while longer-term reforms phase in. That could mean:

• Borrowing from the separate disability insurance (DI) trust fund, which is in better shape.
• Using general federal revenue to temporarily support Social Security.

The risk, of course, is that we already have a very large national debt. More borrowing can put upward pressure on interest rates and inflation if markets start to doubt our ability to get our fiscal house in order.

That’s another reason to push for earlier, gradual reforms instead of waiting until the last minute.

How inflation and interest rates fit into this

Social Security benefits are inflation-adjusted, which is one of the best features of the program. But it’s not perfect protection.

COLAs are based on inflation over a specific period, and they’re only adjusted once a year. If inflation spikes after your new benefit is set in January, you can still lose purchasing power over the course of that year.

On the flip side, if the government borrows heavily to support Social Security without a credible long-term plan, investors could demand higher interest rates to hold U.S. debt. That can ripple through the economy as higher mortgage rates, car loan rates, and business borrowing costs—slowing growth and putting more strain on household budgets.

We don’t know exactly how this will play out, but it’s one more reason not to rely on Social Security alone.

The most underrated feature: disability protection

When we talk about Social Security, most of us think “retirement.” But the official name is Old-Age and Survivors Insurance (OASI), and there’s also a separate disability insurance component.

For a 20-something worker today, there’s roughly a one-in-four or one-in-five chance of becoming disabled and unable to work at some point before retirement. Social Security disability benefits are far from generous, but they are a crucial backstop for millions of families.

Most people don’t realize they’re paying for disability protection as part of their Social Security taxes. It’s not something to ignore when you’re weighing the value of the program.

How I’d plan around Social Security in real life

If I zoom out and think about how to use all of this in a practical retirement plan, here’s the approach I like:

1. Treat Social Security as your base income floor. Estimate your benefit at different claiming ages. Then, if your health and finances allow, lean toward delaying to increase that guaranteed, inflation-adjusted floor.
2. Build your own “second paycheck.” Aim to cover at least 70–80% of your pre-retirement income with guaranteed or highly reliable sources: Social Security plus pensions and, for some people, annuities. Then use your investment accounts for extras and emergencies, not for basic bills.
3. Think carefully about withdrawal risk. The classic “4% rule” (withdraw 4% of your portfolio in year one, adjust for inflation each year) doesn’t protect you from sequence-of-returns risk—the danger of a market crash early in retirement. If that happens, you’re withdrawing from a shrinking pot, which can permanently damage your plan.
4. Consider partial annuitization. One way to turn savings into reliable income is to use a portion of your 401(k)/IRA to buy an annuity that pays a monthly amount for life. For example, if Social Security will pay you $2,000/month and you need $4,000/month to cover essentials, you might annuitize enough to create that extra $2,000/month.

Fees and complexity are the big knocks against annuities—and they’re valid concerns. But the landscape is changing. Large, low-cost providers are entering the space and driving down costs. Plain-vanilla, easy-to-understand products are becoming more common, including “bridge” annuities that can cover you from, say, age 62 to 70 so you can delay claiming Social Security.

If you’re curious how a change to the retirement age itself could affect your planning, I walk through that in more detail in this article on changing the Social Security retirement age.

What today’s retirees worry about too much—and not enough

Here’s how I’d summarize the emotional side of all this:

• Worried too much about: Social Security “not being there at all.” Even in the worst case where Congress drags its feet, you’re looking at a partial benefit, not a disappearance.
• Not worried enough about: Overall affordability and lifestyle flexibility. Rising housing costs, healthcare, energy, and taxes can squeeze a fixed income. Where you live, how you spend, and how much flexibility you build into your plan matter a lot.

If you’re nearing or in retirement, I’d spend more energy on questions like:

• What’s my essential monthly budget, and how much of it is covered by guaranteed income?
• How exposed am I to local property taxes, state income taxes, and high housing costs?
• Do I have room to downsize, relocate, or otherwise reduce fixed expenses if needed?

The bottom line: hope for the best, plan for the worst

I’m in the camp that believes Social Security will be made solvent again. It may be messy and later than we’d like, but the political pressure to “save” Social Security is simply too strong for Congress to ignore forever.

In the meantime, here’s how I’d plan:

• Assume your benefit will exist, but be conservative about future COLAs.
• Delay claiming if your health and finances allow; think of early claiming as a last resort, not a default.
• Build additional guaranteed income where you can so Social Security is your floor, not your ceiling.
• Pay attention to your overall cost of living and tax situation, not just your benefit amount.
• And yes—let your elected officials know you care about this. The sooner they act, the smaller and more gradual the changes can be.

You don’t need to rearrange your entire life out of fear that Social Security will vanish. But you also don’t want a retirement plan that only works if Congress does everything perfectly. As always, aim for that middle ground: informed, realistic, and prepared.