Social Security is not projected to disappear. However, the 2026 Trustees Report estimates that the retirement trust fund could deplete its reserves in 2032. If Congress does not act, ongoing revenue would initially cover approximately 78% of scheduled retirement benefits. A new bipartisan proposal may restart reform discussions, but it has not changed anyone’s benefits.
Is Social Security running out of money?
Social Security is facing a significant funding challenge, but “bankruptcy” is not an accurate description.
The Old-Age and Survivors Insurance Trust Fund, which supports retirement and survivor benefits, is projected to have sufficient reserves to pay full scheduled benefits until the fourth quarter of 2032. According to the 2026 Social Security Trustees Report, payroll taxes and other continuing income could cover approximately 78% of scheduled benefits when those reserves are depleted.
That does not mean retirees would receive nothing. It means that without legislative action, the program’s incoming revenue would be insufficient to pay every dollar currently scheduled under existing law.
The distinction matters because retirement decisions should be based on realistic scenarios—not headlines suggesting that Social Security will either remain completely unchanged or disappear altogether.
What is the PROMISE Act?
In July 2026, a bipartisan group of senators introduced the Protecting Retirement Opportunities and Maintaining Income Security for Everyone Act, or PROMISE Act.
The proposal would direct the bipartisan Social Security Advisory Board to develop legislation intended to restore Social Security’s long-term solvency. Congress would then have a defined process for considering and potentially amending that legislation.
The PROMISE Act does not currently:
- Reduce Social Security benefits
- Raise the retirement age
- Increase payroll taxes
- Change benefit eligibility
- Alter how current benefits are calculated
It establishes a process for developing and considering potential reforms. It is proposed legislation, not an enacted change to Social Security. That difference should remain clear whenever the proposal is discussed.
The bill’s introduction is nevertheless consequential because Social Security reform has historically required bipartisan participation. It signals that some lawmakers are attempting to create a formal path toward addressing the program’s finances before reserve depletion occurs.
How could the Social Security shortfall affect retirement planning?
The most useful response is not to predict exactly what Congress will do. It is to evaluate whether your retirement plan remains sustainable under multiple outcomes.
Potential reforms could eventually affect:
- Full retirement age
- Payroll taxes or the taxable-wage limit
- Cost-of-living adjustments
- Benefit formulas for higher earners
- Taxation of Social Security benefits
- Claiming strategies for couples and surviving spouses
No single outcome is guaranteed. For that reason, a prudent retirement analysis may compare current projected benefits with reduced-benefit scenarios.
For example, what happens if a retirement plan assumes:
- 100% of the currently estimated benefit?
- 90% of the estimated benefit?
- 85% of the estimated benefit?
- 78% of the estimated benefit?
Testing these scenarios does not predict a benefit reduction. It measures how dependent a household’s plan is on one source of income that remains subject to legislative and demographic uncertainty.
Should high-net-worth families care about Social Security?
For high-net-worth families, Social Security may represent a smaller percentage of total retirement income. That does not make it irrelevant.
Claiming decisions can still affect lifetime income, survivor protection, portfolio withdrawals, Medicare premiums and taxes. Social Security should therefore be coordinated with the rest of the household’s financial plan rather than treated as a separate government benefit.
A coordinated strategy should consider:
- When each spouse should claim benefits
- How portfolio withdrawals will fund the years before claiming
- Whether Roth conversions could be useful during lower-income years
- How required minimum distributions may affect future taxable income
- How Social Security taxation and Medicare income-related surcharges interact
- Whether a surviving spouse could maintain the same lifestyle after one benefit ends
For many affluent retirees, the larger issue is not the size of one Social Security payment. It is how that payment fits into the household’s broader tax and income strategy.
How can families prepare without overreacting?
A sound plan should be flexible enough to absorb changes in benefits, taxes, markets and personal circumstances.
Build a retirement income plan
Identify which expenses will be supported by Social Security, portfolio withdrawals, pensions, business income or other assets. This reveals where a potential income gap could emerge.
Coordinate Social Security with tax planning
The timing of retirement benefits can affect the taxation of Social Security, Roth-conversion opportunities and the amount withdrawn from tax-deferred accounts.
Falcon’s Comprehensive Tax Planning process evaluates these decisions together because a claiming strategy should not be judged only by the monthly benefit.
Review estate and survivor planning
A surviving spouse may lose one Social Security payment while continuing to face many of the household’s original expenses. Estate Coordination can help align beneficiary designations, trusts, insurance and survivor-income needs.
Maintain an evidence-based investment strategy
Uncertainty surrounding Social Security does not justify abandoning a disciplined portfolio. Low-Cost Evidence-Based Investing can help families manage diversification, costs and risk while their retirement strategy is periodically stress-tested.
This integrated, Family Office-style approach is particularly valuable when retirement income, taxes, investments and estate decisions affect one another.
The planning takeaway
Social Security is not disappearing—but planning as if you will unquestionably receive every dollar currently scheduled could be an expensive mistake.
The PROMISE Act may create a path toward reform, but it does not tell us what the eventual solution will be—or whether Congress will enact one. Individuals should avoid making major decisions based on a single proposal.
A stronger approach is to build a retirement plan that works under several reasonable scenarios and can be adjusted as legislation develops.
Frequently Asked Questions
Will Social Security benefits be cut in 2032?
No benefit reduction has been enacted. The Trustees project that continuing income would initially cover about 78% of scheduled retirement benefits if reserves are depleted and Congress takes no action.
Did the PROMISE Act change Social Security benefits?
No. The proposal creates a process for developing and considering solvency legislation. It does not itself change taxes, benefits, eligibility or retirement ages.
Should I claim Social Security early because of the shortfall?
Not necessarily. Claiming early permanently reduces monthly benefits in many circumstances. The decision should consider longevity, marital status, taxes, portfolio assets and survivor needs.
How should Social Security fit into a retirement plan?
Social Security should be coordinated with investment withdrawals, Roth conversions, required minimum distributions, Medicare costs, taxes and estate planning.
Falcon Wealth Planning offers a No-Cost Financial Assessment with its CFP® professionals and CPA tax-planning team to help families evaluate how Social Security fits within a coordinated retirement, tax and estate strategy.
This material is provided for informational and educational purposes only and should not be construed as individualized investment, tax or legal advice. Tax laws and proposed legislation may change. Consult the appropriate professionals regarding your individual circumstances.
