When we wrote last year about the shifting landscape of retirement, the storm clouds on the horizon for Social Security were hard to ignore. We argued retirement security was weakening, and Wisconsin’s families will be uniquely vulnerable. We put some numbers on that point, pointing out that the old age and survivors’ insurance program reduces poverty in our state, by keeping 322,000 older Wisconsinites above the poverty line.
We estimated that a weakened Social Security Administration will cost Wisconsin households more than $7,000 per year in terms of needing more savings, added insurance premiums, increased state taxes and the potential to support older family members.
Reduced money coming into the system
The Social Security Administration Board of Trustees just released their 2026 annual report, and the financial outlook for the program has worsened substantially since then. The 75-year solvency gap — which measures the shortfall between money in the program and future needs — has expanded by 16%. This is largely fueled by lower projected fertility rates, lower immigration, and recent legislative tax changes that reduce money coming into the system.
Most critically, the clock has run down. The Old-Age and Survivors Insurance (OASI) trust fund — the fund that cuts the checks for more than 60 million retirees — is now projected to slide into insolvency in 2032, just six years from now.
2032 is no longer a distant problem for future generations. If you are a 62-year-old worker in Wisconsin planning to claim your hard-earned benefits today, you will be just 68 when the trust fund is drained and benefits are cut. Social Security cannot spend money it does not have. It cannot borrow to make up the difference.
If Congress does not act before the 2032 deadline, the law mandates an automatic 22% across-the-board benefit cut for every single retiree — regardless of age or income. If the retirement fund is artificially propped up by the disability trust fund, we buy a little time, delaying a cut until 2034. But in the process we would deplete the program that supports workers who are disabled. For the hundreds of thousands of Wisconsinites who count on Social Security monthly payments to buy groceries, pay property taxes, and cover bills, these cuts are not just a simple budgetary adjustment.
Outliving your savings is a genuine risk
According to state-by-state data compiled by the Committee for a Responsible Federal Budget, these cuts will take thousands of dollars out of the average retiree’s monthly budget, totaling an annual loss of over $18,000 for a typical retired couple. In Wisconsin, where a high percentage of our population relies directly on Social Security, the economic ripple effects would drag down local businesses and communities alike. For many communities these cuts will have a direct impact on local spending and quality of life.
It is important to remember that the Old-Age, Survivors, and Disability Insurance (OASDI) program is not as much a benefit as it is insurance — it kicks in if we outlive our ability to work and exhaust our savings. Nearly one-in-ten 70-year-olds live to age 100. Outliving your savings is a genuine risk that Social Security uniquely protects us all against.
The solutions are widely known since this is fundamentally a math problem: outside of benefit cuts, we need some combination of increasing payroll tax revenues and adjusting eligibility. But policymakers continue pretending that the solutions to Social Security are tomorrow’s problem. By doing nothing, lawmakers are actively choosing a 22% benefit cut. Doing nothing is, after all, a policy choice.
Solvency can be achieved through a balanced combination of revenue increases and structural adjustments such as delays in eligibility to older ages, lower rates of annual cost of living increases or adjusting the full retirement age to reflect increases in life expectancy. Given the rapid growth of people earning very high incomes, it probably makes sense to increase the cap on taxable earnings so that high earners contribute more, while not changing the payroll tax for low-income workers. In 2026, the cap on taxable earnings for the OASDI tax is $184,500 (for the Medicare tax, there is no cap).
At the state level, it may also be time for policymakers to consider ways to encourage workers in Wisconsin to save more for their own retirement, even if Social Security reforms are put in place. In fact, the Old Age program was never intended as the only source of income for older people. Encouraging private savings through retirement accounts and employer-sponsored plans is a crucial piece of the puzzle too.
But the most critical factor is time, and the Trustees’ report reminds us that we are running out of it. The longer we delay trust fund solutions, the more abrupt and painful the eventual choices will have to be. If we act now, reforms can be phased in gradually over a decade, giving workers ample time to plan and adjust their retirement savings. If we wait until 2032, the required fixes will hit much harder and faster, potentially leading to ripple effects across families and in our communities.
Modern Social Security has Wisconsin roots
Wisconsin is no stranger to Social Security. The modern Social Security system has Wisconsin roots: faculty at UW-Madison led the creation of the program nearly a century ago. And, as readers of this will all know, the state’s workers pay into Social Security with every single paycheck, trusting that their benefits will be there to support them when their working days are done. Social Security’s actuarial reports are just one more call for advocates and leaders to move from denial to action before it’s too late.
J. Michael Collins is a professor at the La Follette School of Public Affairs at the University of Wisconsin-Madison and the associate director at the Institute for Research on Poverty.
Tyler Q. Welch recently completed his PhD at the University of Wisconsin-Madison. This summer, he will join the Department of Risk, Actuarial Science, Healthcare Management and Legal Studies at Temple University’s Fox School of Business as an Assistant Professor. He is also an associate member of the National Academy of Social Insurance.
This article originally appeared on Milwaukee Journal Sentinel: Storm clouds over Social Security solvency hovering closer | Opinion
Reporting by J. Michael Collins and Tyler Q. Welch, Special to Milwaukee Journal Sentinel / Milwaukee Journal Sentinel
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By J. Michael Collins and Tyler Q. Welch, Special to Milwaukee Journal Sentinel | USA TODAY Network
