Many retirees on fixed incomes already struggle to keep pace with inflation. And if Congress doesn't take action to address Social Security's looming insolvency, the situation could soon become dire.
The primary Social Security trust fund from which retirement and survivor benefits are paid — the Old-Age and Survivors Insurance, or OASI, fund — is now forecast to be depleted by 2032, one year earlier than last year's estimate. Projections pin the 75-year shortfall at $30 trillion.
According to the Bipartisan Policy Center, the revised timeline is the result of changes enacted in the One Big Beautiful Bill Act. If a solution isn't found before 2032, benefits for future and existing recipients are expected to be reduced dramatically.
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Bipartisan acts of Congress are rare, but legislators showed they are still possible last month with the passage of the 21st Century ROAD to Housing Act. However, that landmark law was years in the making, suggesting that a solution for the OASI fund's depletion needs to get underway now or risk arriving too late.
"I'm not very optimistic," says Warren Hurt, senior vice president and chief investment officer at F&M Trust. "The issue undoubtedly needs to be addressed, but any necessary solution will require one or more very politically unpopular decisions to be made."
The options could include increasing current workers' contributions or reducing benefits. Another potential fix could be hiking the retirement age, which Congress hasn't done since 1983.
In June, Reps. Tom Cole, R-Okla., and Tom Suozzi, D-N.Y., introduced H.R. 9187, the Bipartisan Social Security Commission Act of 2026, which tasks lawmakers and external experts with developing legislation to restore Social Security's long-term solvency. The bill also guarantees that a plan receives a vote on the floor.
H.R. 9187 would create a 13-member commission on long-term Social Security solvency. Members would be appointed by the president, congressional leaders of both parties and the chairs and ranking members of the Ways and Means and Finance Committees. Additionally, at least one expert from each party would be a non-elected, outside analyst.
But Hurt warns that even if an agreement is reached, it is likely to shift the retirement landscape. For instance, he says, a plan could include the elimination of the $184,500 income contribution cap — the maximum amount of earnings subject to Social Security payroll taxes in 2026. Earnings above that threshold are currently exempt.
Also, younger Americans are likely to bear the burden of any forthcoming adjustments.
"Changes would need to be significant and unpopular despite being mathematically necessary," Hurt says. "Social Security reforms will and probably should be borne by the higher-income earners and younger workers with the time to make the proper adjustments."
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How much will Social Security payments fall if Congress doesn't act?
While a congressional resolution is required in order for recipients to avoid a devastating blow to their Social Security income, it is prudent to prepare for a worst-case scenario.
Risk management is a critical component of any investing plan, and understanding what Social Security benefits could look like if Congress fails to fix the issue could leave you better prepared. Hurt says that's particularly true for one generational cohort.
"Liquidation of the trust fund would occur as the early Gen X workers were approaching retirement," he says. "That generation is uniquely sensitive to a benefit cut because only 15–20% of Gen X workers are covered by a traditional company pension."
Under current law, Social Security cannot pay out more than it collects once the trust funds' reserves are exhausted. If Congress fails to intervene before 2032, tax revenues will cover just 78% of promised benefits, leaving many recipients scrambling for a solution.
The current average Social Security benefit is $2,084.40 per month. Less 22%, that falls to $1,625.84 per month. Annualized, that equates to a $19,501.08 benefit — close to the current federal poverty level of $15,960 for a single-person household.
Put another way: A 22% cut to Social Security benefits would put the average recipient's income in 2026 at just $3,541.08 above the federal poverty level. That's just $295.09 per month above what is legally considered impoverished.
In inflation-adjusted terms, by 2032, that would be $22,767.93 per year — or $1,897.32 per month — in Social Security benefits based on an the average cost-of-living adjustment, or COLA, of 2.615% over the past two decades.
According to a recently published HealthView Services' white paper on Social Security solvency, cuts could amount to as much as $194,000 in lost lifetime Social Security income for the average couple. Couples collecting the maximum benefit could lose up to $509,000.
How to fill a potential retirement income gap
The lack of private retirement savings by younger generations will be the foremost social and geopolitical crisis of the next 25 years, according to Hurt, who says making up for a 22% reduction in Social Security income is "very difficult." But for those who still have decades of planning ahead of them, it isn't impossible.
"Younger workers have time to adjust spending and savings habits," he says. "They also have the benefit of time and the power of compounding on their side."
For workers who are approaching retirement, ensuring that your plans embrace a blended income strategy can help fill a potential income gap. But for those who have already hung up their gloves, adjusting to an income reduction is far more difficult given their lower risk tolerances and shorter investment horizons.
Rather than drawing down your accounts, consider refocusing your portfolio on yield generation through a combination of high-quality, dividend-paying stocks and income-focused exchange-traded funds.
Most importantly, avoid inaction. A failure by Congress to address the Social Security shortfall will result in inevitable adjustments to your retirement plans. Knowing that now can help you safeguard your finances.
Without a solution, Hurt says it is likely that more Americans will delay retirement, and more older adults will work part-time jobs to try to make ends meet.
"Social Security was a castle built on sand from the beginning, [and] there is no magic bullet that can replace a 22% income gap," Hurt says.
