INSIGHTS

July 15, 2026

Manager Perspective

Social Security: A Little More Time, But the Same Long-Term Challenge

The latest projections on Social Security offer a bit of encouraging news, but they do not change the program’s long-term outlook.

According to the Penn Wharton Budget Model, the Social Security retirement trust fund, known as Old-Age and Survivors Insurance, is now projected to remain solvent until February 2033, a few months longer than the Social Security Trustees’ official estimate of late 2032. If the retirement and disability trust funds are considered together, the projected depletion date extends to February 2035, compared with the Trustees’ estimate of the third quarter of 2034.

C. Angus Schaal, CFP^®

Senior Managing Director

While those dates are modestly better than previously expected, they should not be mistaken for a solution.

Social Security Is Not Going Bankrupt

One of the most common misconceptions is that Social Security will simply disappear when the trust funds are exhausted.

That is not the case.

Even after the trust funds are depleted, workers will continue paying payroll taxes, providing ongoing revenue to the system. Under current projections, those taxes would still be sufficient to pay approximately 83% to 86% of scheduled benefits initially, with the percentage gradually declining over the coming decades if Congress takes no action.

In other words, the issue is not whether benefits continue. The issue is whether full scheduled benefits can be maintained.

Why the Outlook Improved

The slightly longer runway reflects stronger labor market performance, higher wage growth, and differences in forecasting methodologies.

More importantly, both the Penn Wharton Budget Model and the Social Security Trustees reach the same basic conclusion.

The financing gap remains significant and will require legislative action.

What Might Congress Do?

There is no shortage of potential solutions.

Possible reforms include:

Gradually increasing the payroll tax rate.
Raising or eliminating the taxable wage cap.
Incrementally increasing the full retirement age for younger workers.
Adjusting benefits for higher-income retirees.
Adopting a combination of modest tax increases and targeted benefit changes.

History suggests Congress has ultimately acted to preserve Social Security, although reforms have often come late in the process. Any future changes would likely be phased in over time, giving workers and retirees an opportunity to adjust.

What This Means for Investors

For retirees and those approaching retirement, Social Security should continue to be viewed as an important source of retirement income, but not the only source.

For younger investors, today’s projections reinforce the importance of building retirement savings through employer-sponsored plans, IRAs, taxable investment accounts, and disciplined long-term investing.

Financial planning has always assumed that Social Security would evolve over time. The latest report changes the timeline slightly, but it does not change the need for diversified retirement income.

Our Perspective

Headlines about Social Security often create unnecessary anxiety. While the system faces real long-term financing challenges, it is neither insolvent nor on the verge of disappearing.

The latest projections simply provide policymakers with a little more time to act. Most analysts expect Congress will ultimately adopt a package of reforms designed to preserve Social Security’s long-term solvency, though the timing and structure of those reforms remain uncertain.

At Tandem Wealth Advisors, we do not assume perfect outcomes. Our retirement plans are designed to remain resilient under a range of Social Security, inflation, and market scenarios.

As investors, our responsibility is not to react to every headline. It is to build financial plans that remain durable across different political and economic environments.

Bottom line: The projected depletion date moved forward by a few months. The underlying challenge has not changed. There is still time for thoughtful reform, and retirement plans should continue to be built on a diversified foundation rather than any single source of income.

Disclosures:

Tandem Wealth Advisors LLC (“Tandem”) is an SEC-registered investment adviser.

The information published herein is provided for informational purposes only and does not constitute an offer of investment advisory services. All information is subject to change without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. No investment process is free of risk, and investors may lose all their investments. Past performance is not indicative of current or future performance and is not a guarantee. The opinions expressed in this document may not fit your risk and return preferences. The information provided is obtained from sources believed to be reliable, but we cannot attest to its accuracy. Past performance is not necessarily indicative of future returns.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations or comparable terminology. Due to various risks and uncertainties, actual events, results, or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance, or a representation of future events or conditions.

Additional copies of Tandem’s ADV Part 2A and/or Privacy Policy are available upon request by phone at 602-297-8600 or by email at info@tandemwealth.com.