America’s iconic Social Security program, a lifeline for millions of retirees, is staring down a financial reckoning that could reshape the retirement landscape for generations to come. With trust funds projected to run dry by 2032 or 2034—depending on which estimate you trust—policymakers are scrambling to find solutions that will keep the program solvent. The stakes couldn’t be higher: nearly 68 million Americans depend on monthly Social Security benefits, and the pressure is mounting as the baby boomer generation retires in record numbers.
On September 18, 2025, Social Security Commissioner Frank Bisignano made it abundantly clear that “everything’s being considered” when it comes to shoring up the program’s finances, according to Fortune and FOX Business. From raising the retirement age to tweaking benefit caps and tax limits, no option is off the table. “Remember, most people told you and I Social Security wasn’t going to be around, and it’s going to be around,” Bisignano said. “And so the generations that are coming in will probably have a different set of rules than we had.”
The urgency is real. The Committee for a Responsible Federal Budget estimates that Social Security’s retirement trust funds will be insolvent by the end of 2032. Meanwhile, the latest trustees’ report paints a mixed picture: the Old-Age and Survivors Insurance fund can pay full benefits until 2033, after which only 77% of scheduled benefits would be covered by payroll taxes. The combined Social Security trust funds are expected to last until 2034—one year earlier than previously projected—after which incoming revenue would cover about 81% of benefits, as reported by FOX Business. The Disability Insurance fund, on the other hand, is on much firmer ground and should remain solvent through at least 2099.
It’s not just Social Security under the microscope. The trustees also warn that Medicare’s Hospital Insurance fund is projected to run out of money by 2033, at which point it could pay about 89% of promised benefits. The financial squeeze is being driven by multiple factors: lower fertility rates, slower wage growth, and a rapidly aging population. The Congressional Budget Office projects that the Social Security area population will grow from 342 million in 2024 to 383 million by 2054, with all growth after 2040 coming from immigration due to persistently low birth rates.
Yet, amid the gloom, there’s a quirky twist: the very surge in retirements that threatens Social Security’s future is, for now, helping keep the U.S. unemployment rate steady. Despite adding a modest 22,000 jobs last month and tepid labor market data, the unemployment rate has hovered near 4.3%. As David Doyle, Macquarie’s head of economics, told Fortune, “There’s been a surge in retirements this year. The first baby boomers that were born in 1946, they’re now turning 80, and you cascade down from that—I believe the last baby boomer year was 1964—so even the youngest baby boomers are into their sixties now. You now have this huge generation that is gonna be [a] drag on labor force growth.” In other words, fewer people looking for work is helping keep jobless numbers low, at least for the time being.
So, what changes are actually on the table? Raising the retirement age is one of the most discussed—and controversial—options. The current full retirement age (FRA) is in the midst of a long-planned transition: it will rise to 66 years and 10 months in November 2025 for people born in 1959, and will reach 67 in January 2026 for those born in or after 1960, according to CNBC. This marks the final step in the gradual shift from age 65 to 67, a process set in motion by the 1983 reforms. But with insolvency looming, policymakers may consider pushing the FRA even higher for future retirees.
Bisignano emphasized that raising the retirement age isn’t the only lever available. Another key consideration is the earnings cap for Social Security taxes, which is expected to increase to $183,600 in 2026, up $7,500 from 2025. “It’s another thing to put in the equation to think about,” Bisignano said. The Social Security earnings test, which limits how much you can earn while collecting benefits before FRA, will also see adjustments: in 2026, the annual earnings limit is estimated at $24,360 for those below FRA, and $64,800 for those reaching FRA that year.
Other recent policy shifts are already making waves. In early 2025, Congress repealed the Windfall Elimination and Government Pension Offset rules, boosting benefits for teachers, firefighters, police officers, and other public servants whose jobs weren’t fully covered by Social Security. The Social Security Fairness Act, as FOX Business notes, restores and increases benefits for these groups—an important change, but one that adds to the program’s financial obligations.
Of course, the annual cost-of-living adjustment (COLA) is always a hot topic for beneficiaries. The Social Security Administration won’t announce the 2026 COLA until October 15, 2025, after the release of September’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data. Still, experts are forecasting a COLA of about 2.7% to 2.8%, which would raise the average monthly benefit from approximately $2,008 to between $2,062 and $2,064 starting in January 2026, according to CNBC. “While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed,” said Shannon Benton, executive director of The Senior Citizens League. “[Our] research shows that many seniors believe the COLA does not adequately capture the inflation they experience.”
The COLA is calculated based on year-over-year changes in the CPI-W between the third quarter of the current and previous year. Since its introduction in the 1970s, there have been only three years with no COLA: 2010, 2011, and 2016. Social Security benefits are also subject to federal income tax, with up to 85% taxable for higher earners—a detail that often surprises new retirees.
Payment schedules are also a moving target. For 2026, beneficiaries will see increased payments beginning in January, with the exact date depending on their birth date. Those who have received Social Security since before May 1997 will get their first check of the year on January 3, 2026, while others will receive payments later in the month. Supplemental Security Income (SSI) recipients will see their increased payments on December 31, 2025, since New Year’s Day is a federal holiday.
As policymakers debate the path forward, history offers some guidance—and a reminder that tough choices are nothing new. Congress has stepped in before, from expanding benefits in 1939 to adding cost-of-living increases in 1950 and making major reforms in 1983 that included raising the retirement age and payroll taxes. Bisignano struck a note of cautious optimism, telling FOX Business, “It’s really about solving it. Eight years is a long time away.”
With the clock ticking and the nation’s demographic balance shifting, the future of Social Security remains uncertain. What’s clear is that the coming years will bring changes—some popular, others less so—as America grapples with how to support its aging population without breaking the bank.
