By: Russ Kamp, CEO, Ryan ALM, Inc.

With the demise of the defined benefit plan for many workers in the US private sector, Social Security benefit payments become ever more important for a greater percentage of the American retirees and those with disabilities. There have been several stories recently about Social Security and what the “average” recipient might receive in 2026 and worse, what their benefit reduction might be should the forecast of a “lockbox” shortfall in 2033 come to pass. We’ll get the official word on the 2026 COLA sometime in October, but early estimates are forecasting a 2.5% increase for next year. This potential increase barely matches headline CPI and it falls short of the current Core and Sticky inflation #s.

Social Security’s average monthly benefit among all retired workers is $2,006 in 2025, according to a recent AARP article. If the 2.5% increase turns out to be correct, checks will increase $50 / month. If my math is correct, that equates to an average monthly check of $2,056. The maximum Social Security benefit for a worker retiring at full retirement age is $4,018 in 2025. A 2.5% COLA will bring that figure to $4,118 in 2026. For those retiring at 62-years-old the maximum benefit in 2025 is $2,831, while the maximum benefit for a worker retiring at age 70 is $5,108 in 2025. Those numbers will be adjusted accordingly.

As we celebrate Social Security’s 90th anniversary, we need to understand that the on-going rhetoric about SS running out of money is a fallacy. There DOES NOT exist an “operational constraint on the government’s ability to meet all Social Security payments in a timely manner. It doesn’t matter what the numbers are in the Social Security Trust Fund account, because the trust fund is nothing more than record-keeping, as are all accounts at the Fed.” (Warren Mosler, “Seven Deadly Innocent Frauds of Economic Policy”) He continues, “When it comes time to make Social Security payments, all the government has to do is change numbers up in the beneficiary’s accounts, and then change numbers down in the trust fund accounts to keep track of what it did. If the trust fund number goes negative, so be it. That just reflects the numbers that are changed up as payments to beneficiaries are made.”

What we should fear is that Congress does not understand this concept and acts rashly to address the impending “crisis” that doesn’t exist. Recent estimates target a possible reduction in “benefits” at 23% to 24% in 2033. Try telling the nearly 70 million Americans, many relying on SS for most of their retirement assets, that they will see a dramatic reduction in a promised benefit that they themselves helped to fund. With 50% of retirees using SS for more than 50% of their retirement income and another 25% in which SS makes up 90% or more of their retirement income, the economic impact from these potential benefit cuts would be cruel and absolutely unnecessary.