How Secure Is Your Social Security?

Social Security’s Uncertain Future

For generations, Americans believed that Social Security would carry them through retirement. That confidence is fading fast as warnings about the health of the system grow. Many proposals to fix it exist, yet meaningful action remains limited. As the Social Security safety net frays, Americans should now plan for retirement themselves rather than rely on the government.

The Growing Shortfall in Social Security

Social Security, the largest federal government program, is unsustainable as currently structured. In 2023, Social Security spent $1.2 trillion, or 4.5 percent of GDP. By 2033, spending is projected to nearly double, more than the entire defense and nondefense discretionary budget.¹

Social Security is widely understood to be facing a serious shortfall.  The Social Security Administration warns that the program’s financial reserves are projected to be fully depleted by the early to mid 2030s. At that point, beneficiaries would face a 20 to 25 percent reduction in monthly payments. That is equal to about an $18,400 loss in benefits for a typical couple entering retirement. ²

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The combined retirement and disability trust funds are only 9 years away from running out of money. They are short by an amount equal to 4 percent of all the taxable income that funds the program. The shortfall works out to losing about 23 percent of promised benefits or 30 percent of the money that should be coming in. For a typical person, that would mean losing $146,874 in lifetime benefits. ⁴

For the first time in the program’s history, the number of beneficiaries will exceed 60 million by 2025. The ratio of covered workers to Social Security beneficiaries has declined from 41.9 in 1945 to 3.1 in 2024. There is substantial strain on the program’s pay-as-you-go system due to fewer workers funding retirees’ benefits. The program holds no real assets beyond IOUs against future U.S. taxpayers. Those IOUs, amounting to $2.6 trillion as of 2024, are part of the $38 trillion gross national debt.⁵

Several changes made this year’s outlook even worse. A new law called the Social Security Fairness Act removed two rules that used to limit benefits for some workers, which means the program now expects to pay out more money. The Trustees also now believe it will take ten extra years for the country’s low birth rates to recover. And this matters because fewer births today mean fewer workers paying into Social Security in the future. They also expect workers to receive a smaller share of the nation’s income over time, which reduces the amount of money flowing into the system.

Medicare is also becoming more expensive. The Hospital Insurance Trust Fund is in worse shape because spending in 2024 was higher than expected, and costs for hospital and hospice care are projected to grow faster. All of this increases future expenses and adds even more pressure on seniors who rely on these programs.

The Immediate Challenges Facing Retirees

The danger is not only long term. Some Social Security recipients may see smaller payments next year because Medicare Part B premiums are rising. They have surged by 66 percent over the last decade, along with rising deductibles. These premiums are deducted directly from Social Security checks. Even with a cost-of-living adjustment for 2026, many retirees will see most of that increase consumed by higher premiums and rising deductibles. ⁶

Persistent inflation adds extra strain.  A 2.5% cost-of-living adjustment (COLA) for 2025 is barely keeping up with rising prices, especially in areas like healthcare. If inflation stays higher than the CPI for urban wage earners and clerical workers, Social Security payments will lose value. Retirement funds also shrink in real terms as fixed income returns lag rising costs. Many retirees relying on Social Security plus savings may need to withdraw more just to maintain their standard of living.

Conclusion

With the future of Social Security uncertain, diversification becomes critical. Owning physical gold can provide security that the government cannot. Gold holds its value independent of government policy, preserves purchasing power, and can potentially increase the value of a retirement portfolio. A gold IRA offers tax advantages like a traditional IRA but is insulated from the risk of stock market bubbles. Gold also serves as a legacy asset that can be easily passed on.

To learn more about strengthening your retirement with physical gold, call American Hartford Gold today at 800-462-0071.

Notes:
1. https://www.cato.org/blog/fast-facts-about-social-security
2. https://www.pgpf.org/article/social-security-faces-serious-financial-shortfalls-and-other-takeaways-from-the-trustees-report/
3. https://debtdispatch.substack.com/p/fast-facts-about-social-security
4. https://www.ssa.gov/oact/TRSUM/index.html
5. https://www.ssa.gov/oact/FACTS/index.html
6. https://www.aarp.org/medicare/medicare-part-b-premium-increase-2026/