The 2026 Social Security Trustees Report delivered another warning for retirees. The Old-Age and Survivors Insurance (OASI) trust fund is now projected to run out of reserves in late 2032, one quarter sooner than last year’s estimate.
The One Big Beautiful Bill Act (OBBBA) also reduced revenue from taxes on Social Security benefits, adding further pressure to the program’s finances.
Fidelity says this is the time to review how well you’ve prepared for retirement.
Editor’s note: Social Security figures are based on the 2026 Social Security Trustees Report, Fidelity, and the Committee for a Responsible Federal Budget unless otherwise stated.
Why the trust fund is running out faster
In 1960, more than five workers supported each beneficiary. Today, that figure has fallen to 2.9 and is projected to reach 2.2 by the 2070s.
Additionally, payroll taxes now cover 83% of taxable wages, down from 90% in 1983, while lower fertility and immigration projections increased the program’s 75-year funding shortfall to about $30 trillion, up from $26 trillion last year.
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A 22% benefit cut is the current projection
Without congressional action, Social Security would pay about 78% of scheduled retirement benefits after the trust fund is depleted, an automatic 22% reduction affecting roughly 63 million beneficiaries.Â
Someone receiving the average 2026 monthly benefit of $2,071 would lose about $456 each month under that scenario.
Fidelity says planning beats panicking
Fidelity’s message is measured rather than alarming. While the trust fund’s outlook has worsened, Social Security has never missed a payment in more than 80 years.
Congress has historically stepped in before benefits were interrupted, with reforms introduced gradually over time. The focus, Fidelity says, should be on strengthening your retirement plan now instead of reacting emotionally to uncertain headlines.
Current retirees are likely to see the fewest changes
People already receiving Social Security benefits have historically been the least affected by solvency reforms. Brad Koval, director of Fidelity’s Financial Solutions Team, notes that “Historically, changes made to the Social Security program to improve its solvency have impacted younger workers.”
While future legislation remains uncertain, previous reforms have generally protected existing retirees while giving younger generations time to adjust.
Don’t rush to claim Social Security benefits early
Funding concerns are causing some workers to claim Social Security earlier than planned, but Fidelity warns that this decision can permanently reduce lifetime income.
Can Lu, vice president of Fidelity’s Financial Solutions Team, says, “People in older generations may think Social Security is going away so they claim right now, which isn’t good since there’s a huge benefit to delaying.” Waiting could significantly increase monthly payments.
Delaying benefits can increase lifetime income
Claiming at 62, instead of full retirement age at 67, permanently reduces monthly benefits by about 30%. Waiting beyond 67 increases benefits by roughly 8% per year until age 70.
That higher benefit also reduces how much you withdraw from your retirement portfolio each year, helping your savings last longer. Despite those incentives, about one-quarter of Americans (22%) still claim at age 62, locking in a lower income.
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Younger workers have time on their side
Fidelity believes younger workers have the greatest opportunity to prepare because they still have decades before retirement. Lu recommends increasing retirement savings now rather than worrying about future benefit changes.
Even a 1% increase in annual savings substantially improves retirement balances gradually because decades of compound growth amplify every additional dollar invested.
Catch-up contributions could help workers aged 50+ close the gap
Workers 50 and older could boost retirement savings through catch-up contributions. In 2026, eligible workers can contribute an additional $8,000 to workplace retirement plans, bringing the employee limit to $32,500, while IRA catch-up contributions increase by $1,100.Â
Fidelity says these higher limits may help offset any future reduction in Social Security benefits while there is still time to save.
Ages 60 to 63 receive an even bigger boost
Workers between ages 60 and 63 receive the largest catch-up opportunity. Under the SECURE 2.0 super catch-up provision, beginning in 2026, they can contribute $11,250 beyond the standard workplace contribution limit instead of the usual $8,000.
At $35,750 per year for up to four years, this window adds roughly $143,000 in contributions before any employer match or investment growth.
Roth conversions could add more tax flexibility
Fidelity also suggests evaluating Roth IRA conversions as part of a broader retirement strategy. Although converting traditional retirement savings creates a tax bill today, qualified Roth withdrawals are tax-free later.Â
Roth IRAs also avoid required minimum distributions during the original owner’s lifetime, giving retirees greater flexibility if Social Security rules or tax laws eventually change.
Guaranteed income could reduce retirement risk
Fidelity recommends considering annuities for retirees seeking more predictable income. Depending on your age and retirement timeline, options range from tax-deferred variable annuities to deferred income annuities and immediate income annuities.
Creating multiple guaranteed income sources might reduce reliance on investment withdrawals if markets decline or Social Security benefits become less generous than currently scheduled.
A financial plan should include multiple scenarios
Nobody knows exactly how Congress will address Social Security’s funding challenges. Rather than assuming full benefits or preparing for the worst, Fidelity recommends testing your retirement plan under different scenarios.
For example, compare claiming benefits at 62, 67, and 70, or model what retirement looks like if benefits are reduced by 20% to 25%. Understanding how each scenario affects your income helps you make better decisions long before changes become reality.
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Bottom line
The latest Trustees Report makes early planning more valuable than ever, but it doesn’t mean retirees should expect the worst. Even modest changes could strengthen your financial cushion.
Using a cash back credit card for regular expenses and applying the rewards directly to retirement savings or taking on remote freelance work for a few years before claiming Social Security may reduce your reliance on future benefits without dramatically changing your lifestyle.
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Author Details
Chris Lewis, CEPF
Chris Lewis has spent his career turning data into answers. As the Head of Research at FinanceBuzz and a Certified Educator in Personal Finance, he oversees the data journalism and media relations teams, digging into the personal finance topics that shape Americans’ lives at every stage, from Social Security and retirement income to 401(k) strategies, jobs, and real estate.
