What the Headlines Got Wrong About Social Security’s ‘Insolvency’

By: Chip and Jamie Hunt

Last week, headlines about Social Security’s future briefly dominated the news—at least until tensions flared up with Iran—and most of the coverage was worded in ways designed to truly alarm you.

Here’s what really happened: On June 18, the 2025 Social Security Trustees Report was released. It projects that the Old-Age and Survivors Insurance (OASI) Trust Fund—the part of Social Security that pays retirement and survivor benefits—will become insolvent by 2033. And…. that’s just eight years from now.

Naturally, news like this can spark confusion and concern. But before panic sets in, let’s clear up what that “insolvency” really means—and what it doesn’t.

No, Social Security Isn’t “Running Out of Money”

Insolvency doesn’t mean the system is “going broke” or unable to pay anything. It means the trust fund reserves—built up from past surpluses—will be depleted.

But even after those reserves are gone, Social Security will still be collecting payroll taxes, which means it can still pay about 77% of promised benefits. The money continues to flow in—just not quite enough to cover 100% of what’s owed.

So, while the headlines sound dire, the situation is more manageable than the media reports.

Fixes Are Available—and Familiar

We have written about this before, but the Trustees’ report makes it clear: “Lawmakers have many options for changes that would reduce or eliminate the long-term financing shortfalls. Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.” 

In other words, there’s still time to fix this—and the sooner Congress acts, the more measured and gradual the changes can be.

Here are some of the most likely Social Security options being discussed:

1. Gradually Raising the Retirement Age
   Similar to reforms made in the 1980s, this would slowly increase the full retirement age (FRA). The idea is to spread the impact over time and protect those close to retirement.
2. Tweaking Cost-of-Living Adjustments (COLAs)
   Adjusting the formula used to calculate COLAs could slow the growth of future benefits—without cutting current checks.
3. Raising the Taxable Wage Base
   Today, only wages up to $176,100 are subject to Social Security taxes. Increasing or eliminating that cap would bring in significantly more revenue from high earners.
4. Small Increases in Payroll Taxes
   A modest payroll tax hike—perhaps around 1.7% for both employees and employers—phased in over time, could go a long way toward stabilizing the system.
5. Eliminating Complex Claiming Strategies
   Simplifying how people claim benefits could improve efficiency and reduce unnecessary or unintended payouts.
6. Avoid Expanding Coverage While Facing Existing Shortfalls
   Earlier this year, the Social Security Fairness Act expanded benefits to certain workers who hadn’t paid into the system. While well-intended, it also placed additional strain on the trust fund. Expanding coverage further, while current promises remain underfunded, seems imprudent to us.

The Bottom Line: Don’t Panic

Let’s be clear: Social Security is not going away. Even if Congress does nothing (which is unlikely), beneficiaries will still receive about 77% of their scheduled benefits.

But with a combination of modest changes, we can avoid that outcome—and preserve this vital program for generations to come.

What Can You Do?

First, don’t buy into fear-based hype. The media loves a good crisis, but reality is usually more nuanced.

Second, make your voice heard. Contact your Senators and Representatives and let them know you support taking responsible action to strengthen Social Security’s future. You can click [here] to obtain a sample letter to send to your representative.

And in the meantime—take a breath. Live your life. Enjoy each day for the gift that it is.

This article is provided for informational purposes only. It is always best to counsel with your financial advisor or your tax professional to ensure that you make the best decision for your circumstances.