The United States is entering the most expensive phase of retirement. Some of the country's oldest citizens are eligible for more than $100,000 a year in combined Social Security benefits while remaining part of one of the wealthiest generations in America. At the same time, the national debt has just passed $40 trillion this month, and Social Security is on course to enter insolvency by 2032—raising the possibility that it is already too late for the generations left behind.

The budget arithmetic underscores the strain. The Congressional Budget Office projected in 2023 that federal spending on Social Security and Medicare would 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 of the projected $362 billion rise in mandatory outlays. Interest payments add another layer to the pile: the CBO projects net federal interest costs will exceed $1 trillion in 2026 and climb to $2.1 trillion by 2036. In effect, the government is spending money simply to service debt accumulated from previous deficits even as entitlement programs continue to grow.

A generational divide

The state of Social Security appears to have contributed to sharply 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 practical terms, part of a current worker's 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 more smoothly when there were many workers for every retiree—roughly five per beneficiary in 1960, according to Social Security Administration trustees data, versus fewer than three today. The shift reflects baby boomers moving through retirement while younger generations contend with record job market difficulty.

The imbalance is compounded by the fact that Social Security beneficiaries receive well over double what they put into the program. 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. Excluding the employer contribution, lifetime benefits amount to roughly 265% of what the worker personally paid into Social Security. The current system effectively relies on today's workers—including 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 the 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.

Congress has confronted a similar deadline before. The last major rescue of the program came in 1983, when a bipartisan overhaul signed by President Ronald Reagan raised payroll taxes, subjected a portion of benefits to income taxation, and gradually lifted the full retirement age from 65 to 67—changes phased in over years to give workers time to adjust. The 2026 trustees report leaves roughly six years until the projected depletion of the retirement trust fund.

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: placing a ceiling on the benefits paid to the 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 targets an extremely small group. CRFB estimates the cap would affect only 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 little of that wealth will reach others

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 liabilities are deducted, about $88 trillion remains—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 affluent households.

Social Security, meanwhile, was created as social insurance rather than a means-tested welfare program when President Franklin D. Roosevelt signed it into law in 1935. 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 therefore qualify for a substantial Social Security check even when that benefit represents only a small portion of their overall income.

Calls for restructuring

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. The institute's analysis points to systems in other developed countries 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."

Source: Fortune