Why Social Security Will Be Saved With Higher Taxes - Not Benefit Cuts
By Paul Murray, PTM Wealth Management
Every few years, a new headline warns that Social Security is running out of money. This time, the warning comes with a new hard deadline attached. According to the 2026 annual report on the fiscal health of Social Security and Medicare, the Social Security trust fund is on track to be depleted by 2032. If Congress does nothing between now and then, benefits would be cut by roughly 22% across the board — for every retiree, all at once. I strongly believe that this is not a realistic solution for the program, and I do not believe that it will come to pass.
The spectre of benefits cuts deserves your attention. But I want to focus this article on a different question than the one most headlines are asking. The question isn't really whether Social Security gets "fixed." Historically, it always has been. The real question is how — and I believe the answer is going to look a lot more like higher taxes than smaller checks.
Here's my reasoning, and why it matters for how you plan your own retirement income.
The Math Only Has Three Levers
Whenever a program spends more than it takes in, there are only three ways to close the gap: collect more revenue, borrow more, or pay out less. Social Security's dedicated payroll tax means the "borrow more" lever doesn't apply the way it does for the rest of the federal budget — by law, the program can only pay benefits it can afford. So really, lawmakers are choosing between two options: raise taxes, or cut benefits.
Put that choice in front of actual voters, and I believe the answer isn't close. Polling on this question consistently shows large, bipartisan majorities preferring tax increases over benefit reductions — even when people are told they might have to pay a little more themselves. Non politician wants to tell a 70-year-old their check is shrinking. Plenty of people are willing to raise taxes on earnings well above what they personally make.
Both Parties Have Already Tipped Their Hand
Look at where the actual legislative proposals have landed, not just the political rhetoric. Nearly every serious plan currently in front of Congress — from members of both parties — raises revenue in some form:
- Removing or raising the cap on wages subject to Social Security payroll tax (currently capped at $184,500)
- Taxing investment income to help fund the program
- Modestly raising the payroll tax rate itself
Meanwhile, proposals to meaningfully cut benefits have gone conspicuously quiet. Even Republican leadership, which has historically favored a smaller program, has avoided proposing benefit cuts in recent years. When one of the most detailed conservative policy blueprints in recent memory was published, Project 2025, it ran nine hundred pages and never addressed Social Security reform at all. I believe that silence is itself a signal.
Even A"Clean" Bipartisan Fix Leans On Taxes — And It's Still Not Enough
A bipartisan proposal introduced this year by lawmakers from both parties would remove the payroll tax cap entirely. It's a serious, credible idea. And by itself, it would still only close about two-thirds of the funding gap. To fully solve the problem without touching benefits, the tax increases involved would need to be substantially larger than what's currently on the table.
I raise this not to alarm you, but to make a simple point: the "easy" bipartisan fixes are already tax-based, and even they aren't sufficient. Whatever combination Congress ultimately lands on, taxes are doing most of the work.
What This Means For Your Retirement Plan
I don't believe Social Security benefits are going away, and I don't think this Congress — or the next one — will let a 22% across-the-board cut actually happen. It would be political suicide, and lawmakers know it. What I do believe is that the money to prevent that cut has to come from somewhere, and every realistic path leads back to higher taxes: higher payroll taxes, higher taxes on investment income, or simply higher tax rates in general to cover a strained federal budget.
That belief is exactly why our firm has built its planning approach around tax diversification — and why Roth conversion strategy sits at the center of so many of the plans we build. If you're holding the bulk of your retirement savings in traditional, pre-tax accounts, you are effectively betting that tax rates will stay the same or go down by the time you need that money. Based on where Social Security funding pressure is headed, along with broader federal fiscal trends, that is not a bet I'd want my own family making.
Converting savings to Roth accounts today means paying tax at rates we know, on our terms and on our timeline — rather than waiting to find out what rates look like once Washington finishes solving the Social Security funding gap the only way voters will really accept.
The Bottom Line
Social Security isn't disappearing. But the version of it that exists on the other side of this decade will very likely be funded by a meaningfully higher tax burden than the one we have today. Retirement plans built on the assumption that today's tax rates are permanent are, in my view, planning for a world that isn't going to exist.
If you'd like to talk through what proactive tax planning could look like for your specific situation, I'd welcome the conversation. It's also exactly the kind of thing we dig into in our retirement planning classes — if you haven't been to one yet, I'd love to have you.
This article is for educational purposes only and does not constitute personalized tax, legal, or investment advice.
Sources: Marc Novicoff, "The Social Security Reckoning Is Finally Coming," The Atlantic, July 24, 2026, and "The 2026 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds".