Enjoy the Social Security Bump Now. You'll Pay Later.

Social Security is known as the third rail of politics. President Joe Biden has pounced on all who dare even think about curtailing the retirement program. In fact, this week cash-strapped retirees will get the biggest cost-of-living increase in 40 years, an 8.7% boost to protect them from inflation.

For many retirees on fixed incomes, that’s a godsend. Some Republicans are considering reforming the program, an idea that could be political suicide. It's also the right thing to do.

The Social Security trust fund is expected to run out of money in 2035. At that point, taxes taken in will cover only 80% of the benefits paid out each month. If nothing is done, that could mean Social Security recipients are in store for a 20% benefit cut. Recent inflation may speed up this time frame. Benefits are indexed to inflation and the tax revenue that covers the benefit increases is based on wages. If wages rise more than inflation, then Social Security stays on track. But in the last year inflation has risen more than wages, which could hasten Social Security’s shortfall date.

Already, many Americans think they can't rely on Social Security. In 2019, 42% of those polled expect no benefits at all by the time they retire. This suggests some serious cognitive dissonance. Many Americans know they need Social Security and are worried it won’t be there for them, but most also oppose reform.