Social Security Faces a Funding and Service Crisis

The most important thing is this...

• Social Security’s trustees still project the program will run short of full scheduled benefits in the mid-2030s without Congressional action.
• A 2.8% COLA kicks in for 2026, lifting the average retired-worker benefit to about $2,071—welcome, but often not enough to match seniors’ real-world costs.

It’s January 2026, and Social Security is doing that familiar two-step: benefits go up, and anxiety goes up right along with them.

On the “good news” side, most beneficiaries will see a 2.8% cost-of-living adjustment (COLA) in 2026. SSA’s own COLA fact sheet says that moves the average monthly benefit for a retired worker to about $2,071 – and $25k a year is a welcome benefit for most.

But the more important story is what hasn’t changed: the program’s long-range math, and the agency’s day-to-day ability to deliver service at scale.

The funding clock is still ticking

The 2025 Social Security Trustees Report projects the Old-Age and Survivors Insurance (OASI) trust fund can pay full scheduled benefits until 2033, with reserves becoming depleted during 2034 if Congress doesn’t act. After depletion, ongoing revenue would cover about 77% of scheduled OASI benefits under the trustees’ intermediate assumptions.

If you want the short, non-partisan version for busy readers, the Congressional Research Service summarizes it this way: the 2025 trustees projected 2034 as the OASI depletion year.

In plain English: Social Security doesn’t “disappear,” but automatic benefit reductions become the default outcome unless lawmakers change taxes, benefits, or both.

2026 “routine” rule changes you should know

Along with the COLA, several nuts-and-bolts items reset each year. SSA’s 2026 materials spell out a few that matter for working retirees:

• The taxable maximum (the earnings cap subject to Social Security payroll tax) rises to $184,500 in 2026.
• The earnings-test exempt amount (for people under full retirement age for the entire year) rises to $24,480 in 2026.
• For people reaching full retirement age in 2026, the higher exempt amount is $65,160 (applies only to earnings before the month you reach full retirement age).

These tweaks can help some seniors keep more of their benefit while they work—but they don’t solve the bigger affordability pressure many older households feel.

The service crisis: fewer people, more friction

The other half of the story is operational.

In 2025, SSA announced plans to cut about 7,000 workers, bringing staffing down to roughly 50,000 and consolidating regional operations—moves that immediately raised alarms about the agency’s ability to handle calls, claims, and appointments.

A recent Strategic Organizing Center analysis describes widespread field office staff losses and argues these reductions are hollowing out frontline service capacity.

Major outlets have also reported on large backlogs, long call waits, and confusion tied to operational changes.

Social Security - Smart Senior Daily

Smart Senior DailySmart Senior Daily Staff

Why the trust funds can’t “invest their way out”

You’ll also see calls to let Social Security invest like a pension fund. But by law, trust-fund income must be invested in U.S. Treasury securities (special-issue Treasuries). That keeps the program conservative—but it also means returns are tied to Treasury yields, not stock-market growth.

Bottom line

For seniors, 2026 brings a modest raise and a handful of technical rule updates. For Congress, it’s the same old deadline, just closer. And for SSA’s customers, the bigger immediate issue may be whether you can reach a human being—and how long it takes for paperwork to move.

Disclaimer: This article is for general information only and isn’t financial, legal, or tax advice. For guidance on your specific situation, consider speaking with a qualified professional and reviewing official SSA resources.