Will Social Security go completely bankrupt?

Not likely. The system is not expected to disappear, but without changes, the full promised benefits may not be paid beyond 2034.

What does the 2034 date mean?

It’s a projected year when Social Security’s trust funds could be depleted if no reforms are implemented, not a date when benefits stop entirely.

If benefits are cut, how much might they drop?

The latest estimate suggests benefits could drop to about 80% of current promised levels in the absence of reform.

Could reforms protect my benefit?

Yes, Congress may raise taxes, reduce benefits, adjust eligibility age or earnings rules. These reforms could help mitigate cuts, although the timing and magnitude are uncertain.

Should I assume a benefit reduction in my plan?

It depends on your age. If you are under the age of 50, it may be a prudent planning strategy to use a conservative assumption (for example, ~80% of projected benefit) to help build a more resilient retirement plan.

Does solvency risk affect current retirees?

It could. When Social Security references the 20% drop in benefits in 2034 if nothing is done, that would impact all individual currently receiving Social Security benefits.

How often should I revisit my Social Security assumptions?

Regularly—ideally annually or when there is a major legislative or economic shift—so your plan remains aligned with current realities.

Social Security System Solvency Risk | Greenbush Financial Group

Social Security System Solvency Risk

Why the Future of Social Security Matters for Your Retirement Plan

When building a comprehensive financial plan, it’s not enough to model today’s benefits — you also need to evaluate how future uncertainties might affect those benefits. One such uncertainty is the solvency of the Social Security system itself. Because Social Security plays a major role in many retirement income plans, its long-term funding health is a critical planning factor.

At our firm, we assist clients in modelling a range of scenarios around Social Security’s future. This helps to ensures that retirement income strategies remain robust even though uncertainties surrounding the future of the Social Security system exist.

What Does “Solvency Risk” Mean?

Social Security is funded primarily through payroll taxes (workers and employers each pay) and uses those taxes to pay current beneficiaries. It does not operate like a traditional savings pool for future retirees.

Because demographic trends have shifted — fewer workers per retiree, longer retiree lifespans, lower birthrates — the system has begun to face structural funding imbalance.

According to the Trustees’ report, if Congress does nothing, the trust funds may be depleted around 2034. At that point, incoming tax revenue is projected to be sufficient to pay only about 80% of promised benefits.

In practice, this means Social Security is unlikely to “disappear,” but benefits may be reduced in some scenarios — which introduces risk for those relying heavily on those benefits.

What It Could Mean for Your Retirement

Because benefits could face reductions or changes in eligibility or full-retirement-age rules, it’s important to plan with conservatism. For example:

A potential ~20% cut in benefits if no reform passes by 2034.
Delay of eligibility, higher earnings thresholds, or benefit formula adjustments may be possible reforms.
Even if major changes are delayed, knowing the risk allows you to build a buffer rather than relying solely on expected benefit amounts.

Failing to account for solvency risk may leave your plan underfunded or overly optimistic, especially for early retirees or those with longer lifespans.

How We Help Clients Plan for Solvency Risk

At Greenbush Financial Group, we don’t simply assume the “promised” Social Security benefit will be delivered unchanged. Instead, depending on the age of the client, we build flexibility into our clients’ retirement plans:

For clients far away from retirement, we may reduced benefit assumption (e.g., 80% of the projected benefit) as a conservative baseline.
If the benefit ends up unchanged or reforms improve the outlook, that creates upside — an added margin of safety.
We may model multiple scenarios (base case, conservative case, optimistic case) so clients understand outcomes under different reform/timing assumptions.
We integrate these Social Security scenarios with other income streams — pensions, investments, Roth conversions — to ensure the client’s plan remains sustainable even if Social Security changes.
We monitor legislative, demographic, and economic trends and revisit assumptions periodically so the plan remains current.

In short: we plan with uncertainty rather than assuming certainty. This approach helps clients build a retirement income strategy that is resilient.

Key Takeaways

Social Security is unlikely to vanish — but its funding structure faces meaningful risk.
The projected shortfall (~2034) doesn’t mean immediate insolvency, but signals reforms or cuts may be required.
For clients, the practical outcome is that benefits may be lower, later, or altered in some way.
A proactive plan anticipates these possibilities and builds in flexibility rather than relying on “promised” numbers alone.
Our approach at Greenbush Financial Group is to acknowledge and plan for the uncertainty— whether Social Security remains unchanged or is reduced.

Schedule a Consult Call

Featured

Why Social Security Is Running Out of Money—and How to Fix It

Our Social Security Blog Articles

Featured

Will Social Security Be There When You Retire?

Frequently Asked Questions: Social Security System Solvency Risk

Will Social Security go completely bankrupt?

Not likely. The system is not expected to disappear, but without changes, the full promised benefits may not be paid beyond 2034.
What does the 2034 date mean?

It’s a projected year when Social Security’s trust funds could be depleted if no reforms are implemented, not a date when benefits stop entirely.
If benefits are cut, how much might they drop?

The latest estimate suggests benefits could drop to about 80% of current promised levels in the absence of reform.
Could reforms protect my benefit?

Yes, Congress may raise taxes, reduce benefits, adjust eligibility age or earnings rules. These reforms could help mitigate cuts, although the timing and magnitude are uncertain.
Should I assume a benefit reduction in my plan?

It depends on your age. If you are under the age of 50, it may be a prudent planning strategy to use a conservative assumption (for example, ~80% of projected benefit) to help build a more resilient retirement plan.
Does solvency risk affect current retirees?

It could. When Social Security references the 20% drop in benefits in 2034 if nothing is done, that would impact all individual currently receiving Social Security benefits.
How often should I revisit my Social Security assumptions?

Regularly—ideally annually or when there is a major legislative or economic shift—so your plan remains aligned with current realities.

Contact Us . . . .

All of our services start with a complimentary consult. No high pressure sales tactics. We are financial planners, not salesmen. Schedule Yours Today.

About Our Firm: Greenbush Financial Group is an independent registered investment advisory firm based in Albany, New York, that provides four main services to clients: fee-based financial planning services, investment management, employer-sponsored retirement plans, and retirement planning services. The firm serves clients locally in the Albany region and virtually across the United States.