Every paycheck a Gen Z worker earns comes with a promise attached: Pay Social Security taxes now, and the program will provide income when you retire.
But the latest government projections show Social Security faces a substantial funding gap. Social Security’s retirement trust fund is projected to exhaust its reserves in 2032, decades before most Gen Z members reach retirement age.
While this does not mean Social Security will vanish or stop sending checks, benefits would be cut significantly unless Congress acts, experts say.
Politics
“Gen Z shouldn’t plan on Social Security disappearing. That’s not what the numbers actually say,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. “The more realistic risk is a smaller benefit, a later benefit, higher taxes to preserve benefits, or some combination of those changes.”
For young Americans, the most realistic expectation may be that Social Security will provide some retirement income, but potentially less than current law promises. The size of their eventual check will also depend on what Congress does during the coming decades.
Why It Matters
Gen Z workers are currently helping finance benefits for today’s retirees.
In 2026, employees pay a 6.2 percent Social Security tax on earnings up to $184,500, while employers pay another 6.2 percent. Self-employed workers generally pay the combined 12.4 percent rate.
Because Social Security is largely a pay-as-you-go system, taxes collected from current workers and employers fund current benefits, while any surplus is held in the program’s trust funds. Today’s demographic challenge is that the number of beneficiaries is rising faster than the workforce supporting them.
“For Gen Z, the scarier problem is the uncertainty stretching across an entire working lifetime. Someone in their 20s may spend four decades making retirement decisions around a program whose taxes, retirement age or benefit formula could change several times before they collect,” Ryan said.
Will Gen Z Get Social Security Benefits?
Financial experts’ short answer is probably yes, but the amount is uncertain.
In 2032, payroll taxes are not set to immediately disappear and Social Security will not automatically end. Even if Congress didn’t act to save full Social Security benefits, the incoming revenue would continue covering most, though not all, scheduled benefits.
“The nightmare isn’t necessarily that Social Security disappears,” Ryan said. “It’s that you spend 40 years planning around a promise while nobody can tell you exactly what that promise will eventually be worth.”
The distinction between “scheduled” and “payable” benefits is important, experts say. Scheduled benefits are the amounts promised under the current benefit formula. Meanwhile, payable benefits are the amounts the program could finance with the revenue available under current law.
Under the combined projection from the 2026 Social Security Trustees Report, Social Security could pay:
However, Gen Z should not view the 83 percent projection as a confirmed 17 percent cut to every future check.
Congress could raise revenue or modify benefits before the reserves are depleted.
“When it comes to younger generations and Social Security, the old phrase ‘Hope for the best, but prepare for the worst’ is most appropriate,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “For almost a century, Social Security has been one of the most popular programs the federal government has ever introduced. The likelihood of it going away is very slim.”
When Could the Social Security Trust Fund Run Out?
The Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivor benefits, is projected to pay full scheduled benefits until the fourth quarter of 2032. At that depletion, the continuing income would cover 78 percent of scheduled OASI benefits.
“Gen Z could be left shouldering a significant burden. They are already dealing with higher college costs, difficulty affording homes, and potentially higher taxes in the future,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
“On top of that, we could eventually see the full retirement age pushed from 67 to 70. I also think a slight increase in the payroll tax is quite likely.”
Why Congress Could Change Social Security Before Gen Z Retires
Lawmakers have numerous options to fix the Social Security funding gap, but each involves trade-offs.
Some have proposed increasing payroll-tax revenue or changing the amount of earnings subject to taxes. There are also discussions of modifying the benefit formula or adjusting retirement ages.
However, time is of the essence, Ryan said.
“The longer Congress waits, the harder it becomes to phase in smaller changes gradually and give younger workers time to adjust,” Ryan said.
How Gen Z Can Plan for Retirement Without Abandoning Social Security
Finance experts say young workers do not need to assume they will receive nothing. However, it may be best to treat Social Security as one potential layer of retirement income rather than the entire plan.
“Because Gen Z will still be under 40 when the Social Security trust fund is scheduled to be bankrupt in 2032, Gen Z’s Social Security is in the crosshairs,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek. “I believe Gen Z will still have Social Security, but it could look very different than it does now.”
Building an emergency fund and regularly setting aside part of each paycheck could provide a steady cushion when they reach retirement age.
How Starting Early Could Help Gen Z Build Retirement Savings
Time may be Gen Z’s greatest retirement-planning advantage. If a worker invested $250 per month from age 22 through 67 and earned a hypothetical 6 percent annual return, compounded monthly, the balance would reach approximately $735,000.
The Bureau of Labor Statistics’ latest expenditure data show Americans age 65 and older spend about $61,400 per year on average. So, if someone retired with $735,000 and had no other income at all, that balance would fund roughly 12 years of average retiree spending before running out.
“I would advise those who are Millennials and Gen Z to strongly consider investing more in other retirement products, like a 401k or Roth IRA, to make up some of the financial gap that could come if Social Security benefits are reduced,” Beene said. “The program surviving in the long term will more than likely depend on benefit cuts, increased taxes, and the retirement age trending upward.”
Can Gen Z Count on Social Security for Retirement?
Gen Z can reasonably plan for Social Security to provide some income, experts say, but a worker may not receive every dollar scheduled under today’s formula several decades from now.
“Social Security is too beloved to dismantle completely, but anyone currently under 40 should expect a different retirement experience than their parents and grandparents enjoy,” Powers said.
What Happens Next
Congress has not yet enacted any law to address the shortfall projected in the 2026 Trustees Report.
For Gen Z, Social Security is not projected simply to disappear, but full scheduled benefits are not guaranteed either. Because of this, experts say younger workers should plan around that uncertainty by saving early and treating Social Security as a supplement rather than their entire personal retirement savings.
“This could force many younger Americans to work longer to receive their full benefits at a time when many of their jobs are also being automated at a rapid pace,” Thompson said.
Contact Newsweek editors on this story: Jason Lemon and Gray R. Thomas
