Growing Concerns Over Social Security Viability

John Hart, CEO of OpenTheBooks, recently appeared on Varney & Co. to discuss the increasing pressures that the Social Security and Medicare systems are facing.

With worries mounting about the long-term sustainability of the Social Security Trust Fund, many Americans are opting to apply for benefits earlier. This move is largely motivated by anxiety over the system’s potential depletion.

However, financial expert Suze Orman cautions against this popular advice circulating on social media, indicating it might lead to significant, lasting financial repercussions for retirees. She stated on her website earlier this month, “There’s been some recent talk that claiming early, at 62, is better than waiting for larger benefits. That’s really not good advice.”

About two weeks ago, the Social Security Administration made public its 2026 Trustee Report, revealing that the federal retirement safety net may exhaust its reserves in just under seven years. Specifically, the Old Age Survivors Insurance (OASI) Trust Fund is estimated to run out of funds in the last quarter of 2032.

Once these reserves are fully depleted, only 78% of planned retirement benefits will be covered by ongoing tax revenues, according to the report.

Data from the Social Security Administration shows that many retirees still choose to claim their benefits at 62. However, early filing usually leads to a permanent reduction in monthly payments.

“For those born after 1960, the full retirement age is 67, which allows you to receive 100% of your benefits. If you decide to start at 62, you’ll get only 70%. That 30% reduction becomes permanent, acting like a penalty,” Orman explained.

Orman further illustrated her point, noting that a woman reaching 65 in average health might expect to live to age 88—meaning she will certainly need a steady income to manage her expenses. “Even reaching the break-even age of 79, there’s a strong chance of living at least another decade,” she said. “Every year past that break-even point, those who waited are seeing significantly greater benefits.”

Orman also dismissed the notion that applying early guarantees benefits before the trust funds run out. She pointed out that if Congress takes no action, Social Security is projected to cover about 80% of scheduled benefits, leading to a potential 20% reduction—a situation she characterized as a worst-case scenario. “Historically, Social Security has navigated financing challenges before,” she mentioned, referencing solutions found in the early 1980s that avoided placing burdens on beneficiaries.

To illustrate her point, she provided an example: “If your benefits at 67 are projected at $2,000 and you claim at 62, you would receive only $1,400. Under a worst-case reduction, those who wait until 67 could see benefits drop to $1,600, while early claimants would end up with around $1,260.”

Orman did note two conditions where early claims might be necessary: serious health issues that hinder work or when one needs to tap into retirement savings.

For those considering the best approach, Orman recommended, “The ideal option is to wait until you’re 70 to start claiming Social Security. If you’re married, have the higher earner delay as long as possible—until age 70 if feasible. This way, the surviving spouse will benefit from the larger payment, which is a crucial financial help you can provide.”