Nevertheless, some observers aren’t writing off that possibility, considering gridlock in Washington. After all, retirees are known as a powerful voting bloc-and they don’t look favorably on lawmakers who threaten their financial security. “It’s extremely unlikely that Congress will go, ‘Eh, c’est la vie,’ ” says Aron Szapiro, head of retirement studies and public policy at Morningstar. Social Security isn’t called the third rail of American politics for nothing. The chances of Congress failing to do so are remote, experts say, given how many older voters derive some or all of their retirement income from the program. While the executive branch can nudge lawmakers toward action, it’s ultimately up to the legislative branch to pass a law that will shore up the program. So, what is actually going to happen-and when? That’s the $2.8 trillion question.

“The trustees recommend that lawmakers address the projected trust-fund shortfalls in a timely way in order to phase in necessary changes gradually.” Addressing the Shortfall Kilolo Kijakazi, acting commissioner of the Social Security Administration, declined Barron’s request for an interview, but did provide a statement: “It is important to strengthen Social Security for future generations,” she said, adding that the program will affect 66 million beneficiaries this year. While Congress is likely to step in before such a scenario would come to pass, the program still faces serious challenges, and retirement savers should brace for some degree of benefit cuts, higher taxes, or other changes for the first time in 40 years. For all but the most affluent beneficiaries, it would cause some degree of hardship. That level of reduction could be catastrophic for the roughly one-quarter of recipients who rely on Social Security for at least 90% of their income, according to the Center on Budget and Policy Priorities. This Is the Most Important Social Security Decision You’ll Make.(It’s worth noting that Social Security has two trust funds, one that pays retirement benefits and a much smaller one that pays disability benefits though they’re often referred to together, this article focuses on the larger Old-Age and Survivors Insurance Trust.)

If no additional moves to raise funds or reduce benefits are taken, that cut would gradually grow to 26% by 2095, according to a report by the Congressional Research Service. Unless Congress acts before that date, benefits will be reduced by 23%, with payroll taxes continuing to fund the remaining 77% of scheduled benefits, according to the most recent Social Security trustees report. While Social Security’s trustees project that the Old-Age and Survivors Insurance Trust Fund will run out of money in 12 years-the program paid out more than it took in for the first time last year-it faces insolvency, not bankruptcy.

Still, younger workers who expect the pension system developed during the Great Depression to be completely defunct by the time they reach retirement are probably overstating the case.

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