The New Social Security Report Is Out: What Retirees Actually Need To Know

In today’s episode, you’ll learn more about:

• What the 2026 Social Security Trustees Report says
• Why benefits do not disappear if the trust fund is depleted
• Why the retirement trust fund projection moved to 2032
• How much of scheduled benefits may still be payable
• The most likely Social Security fixes Congress may consider
• Whether Social Security claiming strategies should change
• What affluent retirees should focus on instead

Listen Now:

The Smart Take:

Go Inside the Episode: 

0:00 – Intro

1:10 – What was released?

2:50 – The Big Headline

5:13 – Are the headlines wrong?

7:26 – Possible fixes

13:59 – How to plan for this

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Tyler Emrick:

Today we’re talking about the new 2026 Social Security Trustees report. Every year the headlines say, “Social Security is running out of money. Benefits are disappearing or retirees should panic.” This year’s report says Retirement Trust Fund is projected to be depleted around 2032, but that does not mean benefits are going to go to zero. We’ll cover what the report actually says, why benefits don’t disappear, the most likely fixes Congress may consider, and whether a fluent retiree should change their claiming strategy. All coming up today on Retire Smarter.

Walter Storholt:

Hey, we’re back on Retire Smarter. Welcome. I’m Walter Storholt as always joined by Tyler Emrick, CERTIFIED FINANCIAL PLANNER, a chartered financial analyst at True Wealth Design, based in Northeast Ohio, but serving clients all over the country. And we’ve got another great topic on today’s show, Tyler, Social Security-

Tyler Emrick:

Social Security.

Walter Storholt:

We’re going to one of the basics, but it’s new information about Social Security. So this is what an annual report that comes out, this trustee report, and always interesting to look at the takeaways and the information that’s involved here.

Tyler Emrick:

Oh, absolutely. Well, if you find yourself trying to look for retiree content and blogs and maybe on ARP or some of these other big websites, hey, around this time of year, June, Social Security content kind of ticks up a little bit all because of this annual report, almost like a doctor’s checkup of how Social Securities are doing.

Walter Storholt:

Nice.

Tyler Emrick:

So we figured, hey, let’s take some time, walk through it a little bit, go through some of what it’s saying, how it relates to the families that we work with. I mean, this report is nothing new, Walt. I mean, I was looking at the data, I think it’s the 86th annual report. So this is a common occurrence.

Walter Storholt:

At least they’ve been consistent.

Tyler Emrick:

Absolutely. Well, and Social Security is really a math problem. So when you think about this report, it’s been pretty consistent. It really hasn’t deviated too much in the last handful of years since, or really even going back further than that because of the projections and the way that the math works behind it. But really this report goes into a big hoopla detail on everything Social Security and what happened in 2025 in this case or the prior year. I mean, hey, Social Security’s covering I think about 70 million individuals last year. So I mean, it affects quite a bit of us, Walt. So that’s why that Social Security kind of comes up and is an important topic to many individuals. There’s quite a bit of people that are, even if you’re not getting it, that are absolutely paying into it. Actually, about 185 million people are actually paying into Social Security.

So even if you’re not getting it, hey, it’s still impacting you a little bit for sure. And of course the big headline, Walt, is essentially the shortfall of, hey, what’s getting paid out versus what’s coming in? That shortfall last year was about 160 million, or excuse me, 160 billion with a B, almost going back to the old Austin Powers day, right.

Walter Storholt:

So 160 million.

Tyler Emrick:

You know what?

Walter Storholt:

We might be able to make that up.

Tyler Emrick:

That’s not bad.

Walter Storholt:

That doesn’t sound so bad these days.

Tyler Emrick:

No, no, no.

Walter Storholt:

Elon can come in and fix Social Security just like that. Let’s do it.

Tyler Emrick:

No problem. Yeah. Yeah, absolutely.

Walter Storholt:

Sell some SpaceX. We’re good. We’re good.

Tyler Emrick:

You got it. But in that shortfall is really what’s probably driving a lot of the headlines that we’re going to talk about today. I mean, Social Security benefits are really, when we look at that shortfall, well, there’s a trust fund that kind of makes up that difference of what’s going out and what’s coming in. The question becomes is that trust fund, when is it going to deplete? If we keep using it’s just going to keep going down and eventually be gone. And that depletion is going to happen around 2032. If we account for disability benefits, that depletion date does tick out a little bit and goes out a couple years to 2034. But generally speaking, Walt, hey, we’ve got an issue. Social Security trust funds set to deplete somewhere around 2032 to 2034. What does that mean for our retirees that are actually drawing into it?

So essentially what happens is, is by most of the calculations that I’ve seen and what’s replicated in the report, if you’re currently on Social Security when that happens, they’re projecting that you’re going to take a pretty sizable hit in the benefits that you’re getting.

You would be getting about 78% of your schedule benefits that you’re projected to get. So pretty sizable amount of a decrease there. And that’s just making some general assumptions that payroll taxes continue coming in each year. Payroll taxes, remember that’s the other half of this, right? That’s the funding side of it. That’s when you’re working, you’re paying in a little over 12% into Social Security between you and your employer, so 6.2% each. So that’s how we get money to pay out Social Security. So that’s going to continue. So that leads me to kind of like, well, hey, sometimes when we are looking at these headlines, they’re trying to grab you, trying to catch you, get you to read in, go to the article.

So these big ideas on, “Hey, Social Security’s going to go bankrupt.” That’s not necessarily true. It’s not like, “Hey, at this depletion date, my benefits from Social Security are just going to kind of be wiped out and go to zero.” It’s more like a shortfall or a funding shortfall, not necessarily like that complete worst case scenario in bankruptcy. It’s a hey-

Walter Storholt:

That is how it’s painted though when you talk about things being depleted, running out-

Tyler Emrick:

Absolutely.

Walter Storholt:

… benefits cut dramatically or just the, it’s not going to be there.

Tyler Emrick:

You got it. Well, hey, I’m not saying that a decent size cut where you’re only getting a little under 80% of what you’re due isn’t a big deal.

Walter Storholt:

Not to minimize that threat.

Tyler Emrick:

You got it. Absolutely. But when they run this projection, they have a lot of assumptions that go into it. So when we look at last year’s trustee’s report, things did get a little bit worse on this one. And there’s a few factors that kind of come into play there. Walt, I mean one, hey, there’s a multitude of assumptions. They did tweak some of the assumptions on how much is going to be paid in, fertility rates, some other things. They do actually call out in the report one thing in particular that I thought was interesting as a contributing factor to some of this. Hey, Social Security getting worse year over year. And that was, hey, the One Big Beautiful Bill that we’ve done a multitude of podcasts on and talked about.

And some of the changes within that legislation that essentially put a little strain or certainly more strain on the trust fund and those Social Security points out. So these are changing from year to year. There are certainly some of these slight tweaks, but I think the big caveat here the listeners need to take away is, “Hey, this is a known issue. It’s been a known issue for a period of time. There really hasn’t been much change year over year. Every time we go over this report, that depletion date has been right around the same time, give or take a couple years, either case. So we’ve got a problem.” Well, so the question becomes is, how do we solve that?

What are some of the solutions? If you’re sitting here and you’re listening to this and you’re going, “Hey, is Social Security going to be there for me? How should I plan for this?” That’s a big concern, and I think that’s something that we maybe want to touch on because $160 billion shortfall is not an insignificant amount. In the trustees report itself, actually there are a few suggestions on what would even fix the problem, right?

Walter Storholt:

I like that when people say, “Here’s a problem and here are some solutions.” So that’s good.

Tyler Emrick:

You got it. Yeah, no, and they raised some good ones I think that come out quite a bit. One of them would be increasing the payroll tax rate. So increasing the payroll tax rate, they suggested going up a few percentage points. So it’s like a little over 12% now going up to around 16, 17%. That would essentially solve the issue and get us back to solvency. Reducing scheduled payments by roughly 25%, right? That’s a big one. That’s, hey, you’re getting benefits. Hey, take a 25% cut and-

Walter Storholt:

Which is almost-

Tyler Emrick:

… [inaudible 00:08:37] you’re getting.

Walter Storholt:

… what they’re already projecting would be cut at the shortfall.

Tyler Emrick:

Automatically, right? And then they mention, “Hey, these are the two that they bring up.” And they say, “Hey, using some combination of the two might be a solution.” So I don’t necessarily disagree with what they’re bringing up, but I do think there are some caveats that we need to consider as we’re thinking about what these potential fixes are, right?

Walter Storholt:

Yeah.

Tyler Emrick:

I think raising payroll taxes is certainly a possibility. You think about that’s not taking benefits away from current individuals. It is putting certainly more strain on individuals that are currently working. A few more percent in taxes is not inconsequential [inaudible 00:09:18] individuals work.

Walter Storholt:

And you’re also asking those people to continue to fund something that still feels like there’s a lot of question marks that they won’t be able to benefit from when they get to that point.

Tyler Emrick:

Sure. Like, “Hey, you fix it now.” What happens down the road as demographics changes as the workforce maybe changes and continues? Because yeah, no, absolutely, very fair points.

Speaker 3:

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Walter Storholt:

Also, it feels like they’re trying to wean us, I say, “Us,” like our age, like some current workers off of the Social Security system. Like my wife gets a 401A at work, right? So she’s not paying into the system anymore because it’s all going into this 401A. And so yet she’s kind of saying like, at this point, “My Social Security’s going to be minimal if non-existent by the time I get there,” if she stayed in that job for the rest of her career.

Tyler Emrick:

100%.

Walter Storholt:

Which is great because it gets her off the system, but that solution then, if more and more people are doing that, it’s not going to have as big of an impact.

Tyler Emrick:

No, absolutely. You got it. Well, and you bring up a good point, right? How are you talking about this with your family, with your financial advisor? How are you accounting for this inside of your plans? I would argue depending on your age and where you’re at in your journey and how far away retirement is, there might be different reasonable solutions on how to assume, right? Like, hey, if you’re already in retirement, maybe that isn’t as big of an impact as you if you’re already getting Social Security and so on and so forth versus someone who’s still got 20 year work history ahead of them. How do we want to account and adjust our savings to do that? So it’s a very real, real conversation. But raising payroll taxes, I think has certainly been floated out there a lot. It was actually in the report so talked about. One of the other ones that I think has talked about the report does not mention, but increasing the full retirement age, right? They’ve done that before, Walt.

Full retirement age is essentially when Social Security based off their calculations are saying that now you’re entitled to full benefits from Social Security. Doesn’t mean that you can’t wait past that and get more. But right now for most individuals, it’s around 67, increasing that to 68, 69. Traditionally, it used to be 65 as your full retirement age. So that can certainly play into a factor. Means testing is another one that’s getting floated out there, reduced benefit for higher income earners. We see that a little bit with how Social Security is being taxed. The more income that you bring in, the more taxes or the more of your Social Security that is actually hitting your tax return. So we always get a question comes up all the time. Well, right, hey, do I got to pay taxes on Social Security? Well, it depends. Yeah, it depends on your income and kind of where you’re at and what’s hitting your tax return.

The other one that we float out there and we talk a lot about and some of the things that we adjust and plan is actually adjusting the cost of living adjustment on Social Security each year and what it’s actually tied to. Some prior legislation actually put that into the tax code already. So we’d had some bipartisan approval and had gotten some steam behind that before, but adjusting that increase that you get essentially each year and maybe they putting it towards something called chain CPI where maybe that traditionally lags your general CPI that we would use now by about a quarter of a percent. That might not seem like a lot. You’re not taking benefits away, but you’re just lowering and minimizing that cost of living increase for retirees.

Walter Storholt:

We’re back to that losing money safely mentality.

Tyler Emrick:

We are. We are. No, absolutely. But what I would garner from this if I’m listening is saying, “Hey, there are a handful of solutions.” Depending on where you set, you might agree with one or the other, but I think what we could certainly agree on is the longer that they wait to fix this issue, the bigger the problem or the bigger the fix needs to be. I mean, it’s amazing, but we’re sitting here in 2026. We are just a handful of years away before this problem is staring us in the face.

The question becomes is our legislators going to kind of be a little more proactive and start to get a fix in place now? Or is that something that, “Hey, we’re a year out. We got to make a decision. Maybe we’re going to feel a little bit more pain.” Whatever route that they decide to do when that time comes, right? We’ll see.

But as I’m kind of wrapping up here, I’m kind of like putting myself in listener’s shoes and saying, “Well, hey, what are some practical use cases?” What are the big things to keep in mind? So if you’re a listener and you’re in your early 60s, got a good portfolio, the Social Security headlines like this, in my opinion, really should not drive your claiming decisions at all. Focus on other planning opportunities that you have in front of you, certainly evaluate survivor benefits, delayed retirement, claiming strategies and all those good things. I really think it’s status quo. Have this in the back of your mind, but you’re really there on the doorstep. Social Security’s going to be starting in a handful of years.

Now, if you’re a little bit younger, maybe you’re in your mid 50s, late 50s, you got a few more working years in front of you, I’d be really paying attention to that payroll tax, right? Like, “Hey, are they going to start taxing my income a little bit more to start solving this issue with Social Security? Are there going to be some changes to that full retirement age maybe when you get there?” So it’s more about, “Hey, this is where the age group where that adjustments to the planning might come into play.” Maybe they’re more on a year in and year out basis and monitoring, but I’d be really paying attention to like, “Hey, am I going to have to front load a little bit more of this bill through payroll taxes and how is that going to impact that payment down the road?”

And then the third use case would be someone where, “Hey, you’re already receiving benefits or you’ve been getting benefits for a while. Hey, when I look at current changes to Social Security,” when I say, “Current,” actually, I meant to say, “Historical changes to Social Security,” because we’ve had to make changes to Social Security in the past. We’ve adjusted that and pushed out that full retirement age.

You guys are the biggest voting populists. I would think if some of those politicians want to get reelected, I think that’s probably that worst, last case scenario of really affecting and starting to take away benefits. We’ll see, but I would probably feel a little bit more protected if I was in that group versus someone who’s in their early mid 50s, still got working years ahead of them and maybe staring down some adjustments to the Social Security payments or full retirement age or even you paying in a little bit more. So if you’re already getting those benefits, hey, be mindful of it. But I think there’s a little less likely that those changes are going to directly impact you. At least historically, those changes haven’t impacted you already being on the benefit.

Walter Storholt:

Yeah. Well, Tyler, thank you for the breakdown. Certainly nothing earth-shattering in this year’s report, just kind of updating the numbers and the estimates and reminding us of some of the projections, of course, from the last couple of years of reports. Hopefully sometime before 2032, one of these reports will be much more dramatic because it means they’ll have taken action and some sort of change will be coming to the forefront here, but 2032 is not far away. So we’ve got to-

Tyler Emrick:

Here before you know it.

Walter Storholt:

… hope for some proactivity to help solve this problem before we get there. And I think you’re right and you’re probably on track with the idea that it’s going to be four or five adjustments, right? A little bit of each of those solutions that you talked about that way, not one particular group gets hit the hardest out of it and everybody kind of shoulders some of that burden of fixing the problem, but we’ll see how it all turns out. Absolutely.

Tyler Emrick:

Yeah.

Walter Storholt:

Well, if you have not taken a hard look at your retirement plan and your portfolio and your finances and not quite sure yet about your Social Security claiming strategy and how that fits into the puzzle, these are the kinds of things that Tyler and his team walk people through each and every day in the office. Whether you meet in person or remotely from wherever you are across the country, you can have a one-on-one review of your plan. They call it a discovery meeting. See if you’re a good fit to work with one another. It’s a 20 minute or so call and you can book that right now by clicking the link in the description of today’s show. It’s also at truewealthdesign.com and just look for the Let’s Talk button and you can schedule that time to visit.

Again, click the link in the description of today’s show or go to truewealthdesign.com and book your discovery meeting, see if you’re a good fit to proceed and work together in the future. Tyler, thank you so much for the help today. Appreciate it. And we’ll talk to you again next week.

Tyler Emrick:

Yeah, it was fun.

Walter Storholt:

All right. Appreciate it. That’s Tyler. I’m Walter. We’ll see you next time right back here on Retire Smarter.

Speaker 4:

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