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As of 2025, the Social Security Administration revised its insolvency forecast to 2032.
It won’t actually go bust, of course. But it also can’t continue on its current course of benefits and revenue. Something will have to give, and politicians from both parties have proposed solutions—none of them good news.
So what are these proposed Social Security reforms, and how am I preparing for them personally?
Proposed Fixes for Social Security
Like all government overspending problems, the solutions come in two flavors: spend less, or tax more. In reality, the government will probably combine both.
Here are the proposals most likely to actually happen.
Cut benefits
The simplest option on the table is just to pay out less in benefits. That’s not exactly a popular move for the millions of us who have paid far more into the system than we’ll ever get back. Although that will likely prove true no matter what, it’s just a matter of extent.
Slower COLA increases
Surprise! The SSA has already been doing this for years. By raising the cost-of-living adjustment (COLA) more slowly than real inflation (purchasing power), they’ve managed to delay Social Security’s insolvency. The next COLA announcement for 2026 will come out Oct. 15, based on third-quarter inflation numbers, and is widely expected to be under 3%.
Raise the full retirement age to 69
In 1983, Congress put in place changes that raised the full retirement age from 65 to 67 over the course of decades. We don’t have decades this time around, but Congress has proposed raising it once again from 67 to 69.
Honestly, this one makes sense. When Social Security was first created in the 1930s, the average life expectancy was just 58 for men and 62 for women. In other words, we weren’t planning on paying for many seniors to live very long. Today, life expectancy is around 76 for men and 81 for women, and the ratio of seniors to workers has plummeted.
Means-test recipients
The government could cut or deny Social Security benefits for higher-income seniors, despite the fact that they paid the most into the system throughout their careers.
Raise FICA taxes
Workers and employers pay a combined 15.3% toward Social Security and Medicare taxes. Uncle Sam could, of course, take more of your paycheck and make it even more expensive for companies to hire and keep workers.
Remove the cap on FICA taxes
The SSA caps how much retirees can receive in benefits, and the government also caps how much they tax workers for FICA taxes. That cap could disappear for higher earners, so they pay an unlimited amount into the system, despite being capped on what they could ever receive.
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How I’m Preparing
Now that you’ve gazed into the future and wrapped your head around lower benefits and higher taxes than what your parents enjoyed, how should you prepare?
Don’t count on Social Security
You’ll likely get some Social Security benefits. They just won’t be as juicy as they have been for the last 90 years. And even with full benefits, Social Security is only designed to replace 40% of your preretirement income.
Still, today’s workers under 50 probably shouldn’t budget for Social Security benefits at all, given all the uncertainty around their future. I’m not counting on them.
Higher earners might find themselves as convenient political targets, and could conceivably receive no benefits at all due to means testing.
Plan to work longer
With lower benefits in store, you may need to keep earning money later in life. Which, let’s get real, is a reasonable price for living longer. If someone gave you the choice between a life expectancy of 58 versus 76, with the caveat that you’d have to keep working and paying your own bills up to age 70, which would you choose?
A more aggressive investing portfolio
I was appalled to learn that my sister had 40% of her portfolio in bonds, at the ripe old age of 35.
You’ll need more money in retirement, and that retirement might be further away than you’d planned. To me, the calculus looks pretty simple: Invest more aggressively.
I personally have around half of my portfolio in stocks and half in passive real estate investments. I hope to earn a long-term average of 8% to 10% on my stock investments and 12% to 18% on my real estate investments.
For example, in the co-investing club of peers that I help organize, we invested last month in a property currently paying 9.3% in distributions, projected for a 22.4% annualized return. This month, we’re reinvesting in a land fund that has paid out 16% in distributions like clockwork.
These types of investments help me grow my own portfolio much faster than the average person who’s bogged down prematurely in bonds. In fact, I actually invest in real estate as an alternative to bonds in my own portfolio, although in the three to five years before I retire, I’ll probably move some money into bonds.
Diversifying to mitigate risk
“Brian, your portfolio sounds high risk.”
As a working-age adult, I can handle some risk. When the stock market crashes, that’s basically a Black Friday sale for me to buy stocks at a discount. I don’t need to sell stocks anytime soon.
Even so, one way I mitigate risk is through diversification. In my stock portfolio, that means buying both international and domestic stocks, large-cap and small, in every sector. You don’t need to become a stock wizard to do that. Just use a roboadvisor or buy shares in the Vanguard Total Stock Market Index Fund (VTI) and the Vanguard FTSE All World Excluding US Fund (VEU).
On the real estate side, I invest just $5,000 at a time, every month, as a form of dollar-cost averaging. Our co-investing club meets every month to vet a new passive investment, whether that’s a private partnership, syndication, private fund, or secured private note. We all analyze the risk together, and each person can invest small amounts. That lets us diversify across states, operators, asset classes, and payback timelines.
I even added a little precious metal to my portfolio recently. While you won’t get rich investing in gold, it helps protect your portfolio from inflation, geopolitical risk, and stock market crashes.
“Precious metals provide retirees with a tangible hedge against market volatility,” notes Jesse Atkins, director of market research for SEMAFO Gold, in a conversation with BiggerPockets. Investing in gold also protects against the U.S. government inflating away its debts, which keep ballooning.
Plan for higher tax rates
The current debt-to-GDP ratio in the U.S. is a worrying 119%.
Ultimately, the government can’t keep overspending forever. Sooner or later, it will have to get serious about either cutting spending or raising taxes, and probably both. “Tax rates will almost certainly rise again in the future,” explains tax attorney and CPA Chad Cummings of Cummings & Cummings Law in a conversation with BiggerPockets. “That could happen as soon as post-2026 midterm elections.”
It’s a double whammy that could hit us in our golden years: higher taxes and lower Social Security benefits.
Take advantage of relatively low tax rates now by taking the hit on capital gains tax for assets you want to sell or making Roth conversions.
Max out Roth accounts
If you agree that tax rates will rise in the future, then it makes sense to knock out taxes now and let your investments compound tax-free.
Consider maxing out your Roth IRA and opting for a Roth 401(k) if you have access to a workplace account. As touched upon, you can also convert your traditional IRA or 401(k) funds to Roth accounts. That triggers a one-time tax payment now, but you’ll never pay taxes on the money again, no matter how much it grows.
Many of my fellow members of the co-investing club invest in Roth self-directed IRAs. Their balances keep exploding in value, and they’ll never pay another cent in taxes on it to the IRS.
The less you lose to taxes in retirement, the better you can withstand lower Social Security benefits.
As a final thought, Cummings adds that if the government starts means-testing recipients and restricting Social Security benefits to higher earners, Roth accounts can help protect them. “Future income-based benefit cuts may use modified adjusted gross income as a threshold. Roth withdrawals do not count toward MAGI,” he adds.
Explore cost-of-living contingency plans
My family and I lived abroad for 10 years, and I can tell you firsthand that the quality of life is just as high, but the cost of living is far lower.
Just four months ago, I was living in a three-bedroom apartment with a 180-degree view of the Pacific Ocean in Lima—a city with 11 million residents—and paying $1,300/month in rent. And yes, it was a great neighborhood, with trendy cafés on every corner. The cost of living in Lima is 65% lower than in Los Angeles, for example.
If the U.S. becomes too expensive or politically fractious, we can always move back to Peru, Brazil, the UAE, Italy, Romania, or any number of other countries we love, where our dollars stretch farther than they do in the U.S. In fact, my family and I have long-term residency in Brazil through 2030, although it’s easy to get a digital nomad visa in many countries nowadays.
Nor do you have to move overseas to enjoy a lower cost of living. Ditch the average $1,240,382 San Francisco home to enjoy a $247,197 average home in Kansas City. You’ll still enjoy all the amenities of a major city while paying a fifth of the cost to live there.
Today’s Workers Will Foot the Bill
For 90 years, retirees have enjoyed generous Social Security benefits. But with fewer babies being born and workers paying into the system, Social Security can’t continue on the same trajectory. You won’t get out anywhere near what you paid into the pyramid.
Plan to cover your own living expenses in retirement, with returns from your own investments. Plan on higher taxes, too, while you’re at it, in case the future feels too cozy.
Up your game as an investor, because you’re going to need more than you think.
