Overview
- CBO and outside analysts say the Old-Age and Survivors Insurance trust fund could be exhausted in about six years, which would shift Social Security to pay-as-you-go funding.
- When reserves are gone, benefits fall to match payroll tax income, and estimates point to about a 23% to 24% average cut for recipients.
- One example shows a $2,400 monthly benefit dropping to about $1,850, which would shave roughly $6,600 a year from a retiree’s fixed income.
- The Social Security earnings test in 2026 withholds $1 in benefits for every $2 earned above $24,480 for those who claim before full retirement age and keep working, though withheld amounts are later credited.
- Planning windows matter in early retirement, as a few lower-tax years can allow strategic Roth conversions that may reduce lifetime taxes and future required withdrawals.