The United States is entering the most expensive phase of retirement. Some of America’s oldest are eligible for more than $100,000 a year in combined Social Security benefits, while remaining as one of the wealthiest generations in the country. The national debt is rising—just passing $40 trillion this month—and Social Security is set to enter insolvency by 2032, meaning it may already be too late for the generations left behind.
The Congressional Budget Office projected in 2023 federal spending on Social Security and medicare will account for 81% of the increase in mandatory spending between 2023 and 2033. In 2026 alone, increases in Social Security and Medicare spending account for nearly half the projected $362 billion increase in mandatory outlays. Interest on the debt is adding even another layer on the stack of debt pancakes. CBO projects net federal interest costs will exceed $1 trillion in 2026 and rise to $2.1 trillion by 2036. That means the government is spending money to simply service the debt accumulated from previous deficits, even as entitlement programs continue growing.
The state of Social Security appears to have contributed to drastically different generational outlooks on the benefit. A December 2025 survey by the Cato Institute found that only 34% of Gen Z respondents expected Social Security to exist when they reached retirement. Cato’s June 2026 analysis also found that 79% of younger respondents expected some type of cut to their own future benefits.
“The survey revealed that young Americans are the least likely to expect Social Security will exist for them,” the study noted, “the most open to reforms, and the least likely to understand how the program works.”
Social Security is a pay-as-you-go program, meaning most payroll taxes collected from today’s workers are used to pay benefits to today’s beneficiaries. In simpler terms, a part of your paycheck subsidizes a boomer’s benefits—and according to the Cato Institute’s 2025 polling, only 45% of Americans correctly understand how the program works. Under current law, employees and employers each pay 6.2% of wages into Social Security up to an annual taxable maximum, which is $184,500 in 2026. Self-employed workers pay the combined 12.4% rate.
That structure worked far smoother when there were many workers for every retiree. But the demographic math changed—baby boomers are now moving through retirement while younger generations deal with record job market difficulty.
And it doesn’t help that Social Security beneficiaries are getting over double their investment into the program back. A median-wage worker retiring in 2027 is expected to receive roughly $730,000 in lifetime Social Security benefits compared with less than $200,000 in combined contributions from the worker and employer. When the employer contribution is excluded, the lifetime benefits amount to roughly 265% of what the worker personally paid into Social Security. The current system is effectively relying on the workers of today—which include millennials and the younger end of Gen X—to finance retirees.
What the government is going to do about it
The federal government has reached a point where arithmetic becomes unavoidable. The 2026 Social Security trustees report projects that the Old-Age and Survivors Insurance trust fund will be depleted in the fourth quarter of 2032. At that point, continuing program income would cover only 78% of scheduled retirement benefits. The theoretically combined Social Security trust funds are projected to be depleted in 2034, when incoming revenue would cover 83% of scheduled benefits. Without congressional action, that would mean an automatic reduction in benefits.
The Committee for a Responsible Federal Budget estimates the retirement program would face an approximately 22% across-the-board reduction when the retirement trust fund is exhausted. The committee has proposed one way to address the issue—putting a ceiling on the benefits paid to its wealthiest retirees. Dubbed the “Six Figure Limit,” the proposal would cap Social Security benefits at $100,000 annually for a married couple retiring at the normal retirement age, with the limit adjusted for marital status and claiming age. A single retiree’s comparable limit would be $50,000.
The proposal is aimed at an extremely small group. CRFB estimates the cap would only really affect the top 0.05% of couples in its early years, households with average annual retirement income above $2.5 million and average net worth above $65 million. The organization says the cap would become more consequential over time as Social Security’s maximum benefits continue to rise.
CBS News reported in March that roughly one million individual Social Security beneficiaries receive at least $50,000 a year, meaning a married couple with two such beneficiaries could receive more than six-figures.
The Social Security Administration did not immediately respond to a request for comment from Fortune.
Boomers are rich—but no one else will get their wealth
Baby boomers collectively hold roughly $93 trillion in wealth, according to Visa Business and Economic Insights, but only about $36 trillion is expected to pass to millennials and Gen X over the next two decades. The difference is reflected in taxes, debt, spending during retirement and the concentration of wealth among the richest boomers. After the dedication in liabilities, about $88 trillion remain—and the top 1% holds about one-third of that wealth. Boomers are also expected to spend approximately $16 trillion during retirement on housing, food, healthcare, prescriptions and other expenses.
That means the “Great Wealth Transfer” will not move a $93 trillion pile of assets from retirees to younger Americans. A substantial portion of it will never be inherited, and much of what is transferred will be concentrated among the affluent households. But the Social Security program was created as social insurance, not as a means-tested welfare program. So someone who earned more during their career generally receives a larger benefit, subject to the program’s formula and taxable maximum. An affluent retiree can qualify for a fat Social Security check even when that benefit represents only a small portion of their overall income.
According to the Cato Institute, Social Security should focus more heavily on protecting seniors from poverty while giving younger workers greater opportunity to build private retirement savings. Their analysis points to systems in other developed countries across the world that use combinations of basic pensions, targeted benefits, automatic adjustments and private savings mechanisms.
The United States’ earnings-related benefit structure can produce increasingly generous payments for higher earners, based on the Cato Institute’s report. The organization notes that a maximum-earning worker claiming Social Security at age 70 can receive more than $61,000 a year, while arguing policymakers could reduce benefits for higher-income retirees in a restructuring.
“Policymakers should consider fundamentally rethinking the program’s structure and transform it into a system that ensures seniors are protected from poverty when they can no longer work,” the institute wrote, “while also freeing up resources for younger workers to save more on their own.”
