Social Security is not projected to disappear.

But if Congress does nothing, the Old-Age and Survivors Insurance Trust Fund is projected to be depleted in the fourth quarter of 2032, and continuing income would be sufficient to pay about 78% of scheduled OASI benefits at that point.

That raises an uncomfortable question for financial advisors:

If there isn't enough money to pay all scheduled benefits, how would the available money actually be divided among retirees?

That question was at the center of a recent Financial Experts Network webinar featuring Mark J. Warshawsky, Ph.D., former Deputy Commissioner for Retirement and Disability Policy at the Social Security Administration.

Rather than simply revisiting the familiar discussion about Social Security solvency, Warshawsky explored what could happen at the point of Trust Fund depletion if broader reform still hasn't occurred.

And his conclusion was clear: an across-the-board reduction isn't the only possible approach.

First, Social Security Doesn't Literally “Run Out”

The phrase “Social Security runs out” can create the wrong impression.

Payroll taxes and other revenue would continue flowing into the program even after Trust Fund reserves are depleted.

The issue is that projected incoming revenue wouldn't be enough to pay all benefits currently scheduled under law.

The 2026 Trustees Report projects that the OASI Trust Fund will be able to pay full scheduled benefits until the fourth quarter of 2032. At depletion, ongoing income would cover approximately 78% of scheduled benefits.

There's another important distinction.

Social Security has separate trust funds for Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI). If those funds are considered on a combined basis, the projected depletion date is later—2034—and approximately 83% of combined scheduled benefits would be payable then.

For advisors, that's why it's important to know exactly which number is being discussed.

Why Has the Outlook Become More Difficult?

Warshawsky emphasized demographics.

Social Security relies heavily on payroll taxes from today's workers to support current beneficiaries.

Lower projected birth rates mean fewer future workers relative to the number of retirees receiving benefits.

The 2026 Trustees Report places the combined OASDI long-range actuarial deficit at 4.42% of taxable payroll over the 75-year projection period.

That's a sizable gap.

It also means that solving the problem entirely through one lever—only higher taxes or only lower benefits—would require meaningful changes.

And that's where the policy discussion gets complicated.

What If Everyone Simply Gets the Same Percentage Cut?

One widely discussed possibility is a proportional reduction.

If incoming revenue can support 78% of scheduled OASI benefits, then affected beneficiaries might receive roughly 78 cents for every scheduled dollar.

At first glance, that sounds simple.

But Warshawsky questioned whether it would be equitable.

A retiree relying almost entirely on Social Security and another retiree with several million dollars in assets could both experience the same percentage reduction.

That led to the heart of his research:

Could the shortfall be allocated differently?

Option One: Put a Cap on Benefits

Warshawsky discussed a proposal developed by economist Andrew Biggs and attorney Kristin Shapiro.

Instead of reducing everyone's benefits by the same percentage, their approach would establish a maximum monthly benefit.

People receiving benefits below the cap would avoid reductions, while those above the cap would experience progressively larger cuts.

The attraction is obvious.

It's relatively simple.

It's easier to administer than a complicated means test.

And it protects people receiving smaller Social Security checks.

But Warshawsky identified a major weakness.

The amount of Social Security someone receives isn't necessarily a good measure of how wealthy they are.

A High Social Security Benefit Doesn't Necessarily Mean a Wealthy Retiree

Warshawsky used data from the Health and Retirement Study to compare Social Security benefits with household resources.

The relationship wasn't nearly as straightforward as one might assume.

Some people receiving high Social Security benefits had relatively modest net worth.

Other people receiving much lower benefits had significant assets.

Why?

A Social Security benefit reflects a person's earnings history—not the entirety of their financial life.

Someone might have:

• Significant investment assets.
• A valuable home.
• Business interests.
• Large retirement accounts.
• A pension.
• A wealthy spouse.
• A shorter Social Security-covered work history.

So if the goal is to protect people who have fewer retirement resources, Warshawsky argued that simply looking at the size of the Social Security check can be a blunt tool.

Warshawsky's Alternative: Look at Net Worth

That led to the alternative he presented during the webinar.

Warshawsky proposed a temporary asset-based means test based partly on Australia's retirement-income system.

Importantly, this is not current law and has not been enacted by Congress.

In the version he modeled, the test would initially apply to retirement-age beneficiaries between 62 and 74.

It would exclude disability benefits and child survivor benefits.

And instead of looking at annual income, the model would look at individual net worth.

That could include:

• Home equity.
• Retirement accounts.
• Investment assets.
• Business ownership.
• The actuarial value of pensions.
• Other assets.

Debt would be subtracted.

Under the model presented, someone in the targeted age group with individual net worth below approximately $470,000 would receive full benefits.

Benefits would then be gradually reduced as net worth increased, reaching full elimination at approximately $785,400.

Again, those numbers are part of Warshawsky's analytical proposal—not current Social Security rules.

What Would That Actually Mean?

Using the data in his model, Warshawsky estimated that among the affected population:

• About 45% would receive full benefits.
• Roughly 16% would receive partially reduced benefits.
• About 40% would receive no benefit during the applicable age range.

He argued that the approach could initially generate enough savings to address the projected shortfall around the time of OASI depletion.

But he was also candid about the drawbacks.

Administering a national asset test would be complicated.

It could require coordination across government agencies.

And it could influence how people save, borrow, hold assets, or structure their finances.

Warshawsky repeatedly described the idea as a contingency or stopgap, not the ideal long-term Social Security reform.

Is That Basically a Wealth Tax?

Warshawsky addressed that question directly.

Economically, he acknowledged that an asset-based benefit reduction functions much like a tax on wealth.

But he framed it as part of the administration of a government benefit program rather than as a separate tax system.

Whether policymakers would ever adopt such a system is another question entirely.

The bigger takeaway for advisors is not that this proposal is likely to become law.

It's that means testing is one of several directions future Social Security reform could take.

Could Higher Taxes Solve the Problem Instead?

Of course, reducing or means-testing benefits isn't the only possibility.

The webinar also examined revenue-based approaches.

One proposal discussed would impose Social Security payroll taxes on earnings above $400,000 and add taxes on certain investment income for higher-income households.

Warshawsky compared earlier estimates of that proposal with today's larger financing shortfall and argued that the current gap is greater than it was when the proposal was originally evaluated.

That illustrates one of the central tradeoffs in Social Security reform:

Do you ask future workers and taxpayers to contribute more, reduce scheduled benefits, or combine both approaches?

There is no painless option.

What About Raising the Retirement Age?

During the Q&A, an attendee suggested raising the retirement age.

Warshawsky made an important point:

Raising the retirement age is a benefit reduction.

If someone must wait longer for an unreduced benefit, the lifetime value of the benefit changes.

That doesn't mean policymakers won't consider it.

It does mean advisors should understand it as a benefit-policy change rather than simply an administrative adjustment.

Could the Payroll Tax Cap Just Be Eliminated?

Another common suggestion is increasing or eliminating the amount of earnings subject to Social Security payroll taxes.

That would produce additional revenue.

But Warshawsky argued that the gap has become large enough that revenue changes of this type may still need to be combined with other reforms.

The 2026 Trustees Report itself emphasizes that legislative action will be required to prevent OASI depletion.

The question is what combination of changes ultimately proves politically acceptable.

Could Social Security Become More Like a Welfare Program?

One of the broader possibilities discussed was using more general federal revenue to finance Social Security.

That would represent a major change.

Social Security has historically been structured largely as an earned social-insurance benefit financed through dedicated payroll taxes.

Greater use of general revenue—or broad means testing—could move the program closer to a system focused more explicitly on financial need.

That would raise fundamental questions about what Social Security is supposed to be.

Is it primarily:

• An earned retirement benefit?
• A social insurance program?
• A poverty-prevention program?
• Some combination of all three?

Those aren't merely financial questions.

They're policy choices.

What About Spousal Benefits?

The Q&A also touched on spousal benefits.

Warshawsky noted that the existing structure was created when household labor patterns looked very different than they do today.

That doesn't mean spousal benefits will necessarily change.

It does mean they could become part of a broader reform discussion involving how Social Security reflects modern household and work arrangements.

Should Wealthy Clients Claim Early Before Benefits Change?

This was one of the most practical questions advisors raised.

If Social Security might someday be means-tested, should a wealthy client simply claim earlier and collect benefits while they still can?

Warshawsky cautioned against overreacting to a proposal that hasn't become law.

His asset-based approach hasn't been enacted.

It hasn't been adopted by Congress.

And the eventual policy response could look completely different.

That makes it risky to change a client's claiming strategy today based on one hypothetical future reform.

A decision to claim Social Security early is real and generally irreversible beyond limited circumstances.

A future means test is still hypothetical.

Those are very different levels of certainty.

What Should Advisors Do Instead?

This may be the most important practical takeaway from the webinar.

Advisors don't have to predict what Congress will do.

They can stress-test the financial plan.

For example, consider modeling:

• 100% of currently scheduled Social Security benefits.
• A reduced benefit beginning in the early 2030s.
• A delayed claiming strategy.
• An earlier claiming strategy.
• Higher taxes on retirement income.
• Lower benefits for higher-resource households.

The point isn't to tell clients one of those outcomes will happen.

It's to understand whether the retirement plan can tolerate different possibilities.

Five Questions Advisors Should Be Asking

1. Is the client's retirement plan overly dependent on Social Security?

If a relatively modest reduction would materially affect the client's lifestyle, that risk deserves attention today.

2. Should younger clients assume they'll receive 100% of currently scheduled benefits?

Advisors may want to model more conservative assumptions while making clear that actual future benefits depend on legislation and program finances.

3. Does a client's claiming decision still make sense under multiple scenarios?

A good claiming strategy shouldn't depend entirely on one forecast of future policy.

4. How would higher taxes affect the plan?

Even if scheduled benefits are preserved, additional revenue could potentially come from workers, investment income, taxable earnings, or other sources.

5. Are we distinguishing current law from proposals when speaking with clients?

This may be the most important communication responsibility.

A projected Trust Fund depletion date is not the same thing as an enacted benefit cut.

And a policy proposal is not the same thing as future law.

The Bottom Line

Social Security's financing problem is becoming harder to ignore.

The OASI Trust Fund is currently projected to be depleted in the fourth quarter of 2032, with continuing income sufficient to pay approximately 78% of scheduled OASI benefits at that point if Congress has not changed the law.

What happens next is uncertain.

Policymakers could raise taxes.

They could modify benefits.

They could change retirement ages.

They could alter the taxable earnings base.

They could introduce some form of means testing.

They could combine several approaches.

Or they could choose a solution that isn't yet receiving much attention.

For financial advisors, the goal shouldn't be to predict the exact legislation.

The goal is to build retirement plans that remain workable under more than one Social Security outcome.

That means separating projections from promises, proposals from law, and planning scenarios from predictions.

And as 2032 gets closer, those distinctions are likely to become increasingly important in client conversations.

About the Webinar

What Happens When Social Security Runs Out? A Former SSA Deputy Commissioner Weighs the Options featured Mark J. Warshawsky, Ph.D., former Deputy Commissioner for Retirement and Disability Policy at the Social Security Administration.

The session examined Social Security's projected Trust Fund depletion, alternative approaches to allocating benefit reductions, revenue proposals, means testing and the implications of policy uncertainty for retirement planning.

The webinar provided 1.5 CFP® CE credits and 1.5 IAR Products & Practices CE credits for eligible attendees who satisfied applicable attendance and reporting requirements.

This article is intended for educational purposes only. Policy proposals discussed in the webinar—including benefit caps and asset-based means testing—are not current law and should not be interpreted as predictions of future congressional action. Financial professionals should consult current Social Security Administration guidance when advising clients.