The combined Old-Age, Survivor and Disability Social Security Trust Fund is projected to be depleted by 2034, leaving the system with insufficient funds to pay retirees’ benefits, according to a recent Social Security Trustees report. If anything, that projection might be overly optimistic. J.P. Morgan Asset Management Retirement Strategist Sharon Carson, who closely monitors Social Security matters, says she wouldn’t be surprised if Social Security actually ran short of money a year sooner, in 2033.
What does this Social Security shortfall mean for current and future retirees? Should people claim their benefits as soon as they’re eligible to get what they can while they can?
Bottom Line Personal asked Carson what’s ahead for Social Security.
Is Social Security Going Away?
Social Security is not going away, says Carson. If the Trust Fund runs out of money, the Social Security Administration will use the payroll taxes paid into the system each year by people still in the workforce to continue to pay retirees’ benefits. Those ongoing payroll taxes won’t generate enough money to pay all of the benefits retirees are due—America’s aging population means that there are too many retirees and too few working-age people for that math to add up—but retirees would receive around 80% of the amounts they’ve been promised.
That said, retirees should not expect this 20% benefits reduction to occur. That’s a worst-case scenario that will happen only if Congress does nothing to address the Social Security system’s finances in the coming years. Carson considers that “extremely unlikely” considering the likely political ramifications.
Social Security Changes Potentially On the Horizon
There are a number of things Congress could do to fix Social Security’s funding issues, but they all essentially boil down to a pair of highly unpopular options. “Look, it’s going to be painful,” says Carson. “It’s either raise taxes or cut benefits.”
Politicians’ aversion to making unpopular decisions means Washington probably won’t fix Social Security’s funding problems until the Trust Fund has virtually run out of money in the 2030s. In fact, Congress might not even settle on a solution until shortly after the system has run out of money…and it wouldn’t be a huge surprise if the “solution” it eventually opts for is only a temporary bandage that pushes Social Security’s problems down the road a decade or two rather than truly fix them.
But Carson is confident that once Washington’s back is against the wall, it will manage to avoid the across-the-board 20% benefit cut described above. Why the optimism? Such a cut would concern millions of retirees, and if there’s one thing that politicians are mindful of, it is the reactions of retirees—the older generations vote at much higher rates than the younger generations…and older voters are keeping a very close eye on Social Security.
What will Congress do? Carson anticipates that multiple modifications will be made to the system, rather than a single cure-all. Here’s a look at seven of the possibilities, along with Carson’s thoughts about the likelihood of each…
The cap on earnings subject to Social Security taxes could be increased or eliminated
In 2026, earned income above $184,500 is not subject to the payroll taxes that fund the Social Security system. Carson considers it very likely that this annual cap will be eliminated, dramatically increased or otherwise modified to expose more earnings to this tax. That means additional taxes for high earners who are still in the workforce. There’s precedent for such a change—Washington eliminated the cap on the portion of payroll taxes that fund the Medicare system decades ago.
High earners could have their benefits reduced
Not only might the well-off have to pay more into the Social Security system in the future, they might receive less back from the system, too—perhaps something in the neighborhood of 10% to 15% less than they otherwise would be entitled to, based on recent proposals. Carson thinks there’s a solid chance that a high-income benefit reduction could be implemented, but she does not think today’s wealthy retirees and near-retirees are likely to be meaningfully affected. If such a rule were put in place, she suspects it would be phased in so that it would mostly or entirely impact people who have not yet even reached their 50s, to avoid upsetting older voters.
Social Security’s annual Cost of Living Adjustment (COLA) could be reduced
Social Security benefits are increased most years to keep pace with inflation. If a more conservative system for calculating those annual inflation adjustments were implemented, that would reduce future benefits in a way that Washington could characterize as an adjustment rather than a direct benefit cut. Carson considers such a change possible but believes that any COLA changes likely would reduce benefits only modestly.
Retirement ages could be increased
When Social Security last encountered major financial problems back in the 1980s, a big part of Washington’s solution was gradually increasing “full retirement age” from 65 to 67. But Carson considers it fairly unlikely that full retirement age will be further increased in the years ahead because doing so would disproportionately affect the people who depend on Social Security the most. “The difference in life expectancy between low and high earners continues to increase,” Carson explains.
Spousal benefits could be reduced
Carson considers it somewhat likely that the benefits paid to retirees’ spouses could be tweaked in a way that results in lower payouts. But if this does occur, she expects it would be done in a way that trims these benefits for high-earning households much more than for lower-earning households. Carson doesn’t expect survivors’ benefits to be cut at all to avoid taking Social Security benefits away from widows.
The taxation of benefits could increase
The Trump Administration hopes to end the taxation of Social Security benefits, and the One Big Beautiful Bill Act signed into law in 2025 included a temporary tax deduction (it expires in 2028) designed to help offset the taxation of those benefits…but it remains possible that Washington eventually will instead increase the taxation of Social Security benefits to help solve the system’s money problems. Most of the money the government collects by taxing Social Security benefits goes back into the Social Security system. Carson suspects that whether the taxation of Social Security benefits increases or decreases depends largely on which political party has the majority when Congress addresses Social Security’s funding shortfall, likely in the early 2030s—Democrats have historically been more accepting of tax hikes than Republicans.
Other taxes could be enacted or increased
Income tax rates could be raised…income tax brackets adjusted…and/or other taxes enacted or expanded to help fund Social Security. As above, Carson thinks the likelihood of this depends on which party is in power.
How Social Security Changes Are Likely to Affect You
How future Social Security changes affect you is likely to depend largely on two factors—your age and your income.
High earners could face some tax hikes and potentially even Social Security benefits reductions in the coming decades. People currently younger than age 50 to 55 likely will face a range of tax hikes and/or benefit reductions. But if you’re older than 50—and especially if you’re older than 55—and your income during retirement is not likely to be exceptionally high, Carson anticipates that the potential financial challenges facing Social Security are unlikely to significantly impact your future retirement income.
Historical precedent supports this—when Washington increased retirement ages back in the 1980s to fix Social Security’s previous funding shortfall, it did so in a way that only affected people who were then in their mid-40s or younger. The full impact of those increased retirement ages only affected people who were then in their early 20s or younger.
If you currently are in or approaching your 60s and it makes financial sense for you to wait until your late 60s or age 70 to claim your Social Security benefits, as often is the case, then wait. Ignore warnings that it’s wise to claim ASAP to get what you can from Social Security before benefits are reduced. While it is true that Social Security benefits could be reduced in various ways down the road, it’s unlikely that those reductions will have a major impact on someone who is already in his/her late 50s or older. Washington knows that significantly reducing the Social Security benefits of large numbers of older voters could have significant political consequences, including the risk of losing their seat, so they’re almost certainly going to avoid doing that.
