Personal Finance

Will Baby Boomers Really Suck Social Security Dry?

David Beren

Published: February 3, 2025 1:17 pm

With roughly 76 million baby boomers living in the United States, those born between 1946 and 1964 will be putting a big strain on the Social Security system in the coming years. As a result, there is considerable concern that this system will be unable to meet the needs of the millions of individuals who will be relying on it for basic income. 

The reality of whether or not baby boomers will have social security dry out is more mired in a narrative certain politicians want to explore rather than 100% reality. Yes, there is a Social Security “crisis” in this country, but it may not be as dire as you hear about on the news. This doesn’t mean long-term concerns about the program are unnecessary, but they are not as worrisome as others might have you believe. 

The Misconception Begins

There is little question that the origin of this misconception about the strain of baby boomers on Social Security began with the significant population size. With 76 million people as part of this generation, it immediately leads to the question of how the program will cover this many people. 

After being established in 1935, baby boomers have been contributing to the Social Security system for decades and helping to fund the livelihood of their parents. However, as this next generation begins to retire en masse, the misconception is fueled by concerns about whether the system can support baby boomers without a significant boost to the exhausting benefit and fund pool. 

In addition to everything else, Social Security is the single largest expense in the United States annually, making it a heavily politicized topic. As a result, politicians use concerns over the fund running out to drive votes to their side by claiming they will help address Social Security issues and that only their party can make a difference. In other words, public concern around Social Security exists because it has gone from a side issue to a front-and-center topic every election cycle. 

Concerns Over Demographic Trends

The biggest concern over demographic trends is pretty easy to discover when you consider that in the 1950s, 16 workers contributed to the retirement of every worker in the United States. As it stands today, in 2025, only 2.7 workers contributed to Social Security beneficiaries, and this number is expected to drop to 2.3 workers for each beneficiary in 2035. 

The resulting concern from this drop is that the fund that pays retiree benefits may be depleted in the next 10 years unless some significant overhaul occurs. However, as long as Social Security taxes exist, the fund isn’t going to go completely bankrupt, which is a piece of information that is conveniently left out of the political debate. 

In 2033, the current payroll taxes contributing to Social Security are expected only to cover 77% of scheduled benefits for baby boomers. This situation is the opposite of the DI Trust Fund, which pays disability benefits and has enough cash reserves to cover checks until 2098. 

While demographic concerns are real, the program won’t go bankrupt in 2033. The fund will still exist if these 2.3 workers contribute to Social Security through taxes, but payouts may be reduced. 

Aging Workforce Benefits? 

One demographic trend that must be considered is that, according to Pew Research and Gallup Data, 19 percent of Americans aged 65 and older were still working in 2024, double the number in the 1980s. This does mean that more money is being poured into the Social Security fund as these workers pay taxes, but it also means that more baby boomers will be delaying their golden years due to rising costs and increased debt. 

As a result, there is a belief that two more years are being added to the potential insolvency date of Social Security to 2035 before the 77% number becomes a reality. This is straight from Steve Goss, chief actuary of the Social Security Administration, who said the following during a Congressional hearing on Medicare and Social Security Insolvency in June 2024: “Employment rates have been very strong, and one thing that’s been good…is the Baby Boom generation upon us, elders, are working at higher ages now.” 

Poor Planning From Baby Boomers? 

According to Kevin Thompson, founder and CEO of 9i Capital, there is a concern that many baby boomers are continuing to work because they failed to plan for the ins and outs of life post-retirement properly. Thompson’s primary concern is that “They did a good job planning for retirement, but a poor job planning for life during retirement, meaning they truly do not know what their day-to-day lives look like and therefore push off the inevitable.” 

Thompson doesn’t believe that seniors staying in the workforce will significantly affect whether or not Social Security remains solvent over the long term. His concern is that working baby boom individuals also claim Social Security, so the potential offset of the money going back into the system and benefits pool isn’t significant. 

What Can Be Done

For as long as many people can remember, policymakers have debated various possibilities to help keep Social Security solvent in the long term. While the program is a continuous source of debate on both sides of the aisle, there is enough bipartisan support from voters and lawmakers that the likelihood of Social Security disappearing is very low. However, the program’s current state will fail without something being done. This said, a few options consistently come up that would help prolong the program’s life as it currently stands today. 

Raising Retirement Age

One of the more popular ideas that would help reduce some of the strain on the Social Security system is to increase the retirement age from 67 (for those born in 1960 or later) to 68, 69, or 70 years of age. 

Even a small change such as this would help reduce overall demand for the program and help increase overall solvency. However, the downside of such an approach would be that you ask workers to continue working longer, which some may find physically challenging. 

Eliminating Maximum Taxable Wage Cap

In 2025, the maximum earnings taxed for Social Security are $176,100. While this amount continues to be raised annually to keep pace with the cost of living, unlike Medicare taxes, there is a hard stop at this number. The prevailing thought is that the Social Security program should be more like Medicare, requiring Americans to pay more taxes on their earnings. 

If this number were raised, it would undoubtedly increase the overall size of the benefits pool considerably. Even though Americans are generally opposed to tax increases, Gallup polling data shows that voters favor increasing Social Security taxes. 

Increasing the Taxable Rate

Following the same idea as eliminating the taxable wage cap, another consideration is increasing the Social Security payroll tax amount. Currently, at 12.4%, employees pay 6.2%, while employers pay the other 6.2%. 

Any potential increase here that would continue to be split between employees and employers, while a harder sell than the other two options being considered, would also work to solve some of the short-term and long-term Social Security program concerns.