Social Security Trust Fund Depletes in a Decade: Here’s How Younger Workers Can Recover Lost Income

On a recent episode of Motley Fool Money, the host fielded a caller worried about Social Security’s future and didn’t sugarcoat the answer. The trust fund, the host said, “will most likely be depleted within a decade” with enough remaining “to pay maybe 75% to 80% of benefits.” The advice for younger workers was simple: plan conservatively, and use the delay window before benefits begin to run Roth conversions at low tax rates.

If you are under 50 and you build your retirement plan around the full benefit estimate on your ssa.gov statement, you are likely overstating your guaranteed income by roughly a quarter. For a worker expecting $3,000 a month at full retirement age, that is a $690 monthly gap. Over a 25-year retirement, that miscalculation compounds into real lifestyle damage, especially with CPI near 332 and trending higher.

The verdict: the advice is right, and the math is unforgiving

The host’s framing holds up. Trust fund trustees have projected for years that without legislative changes, scheduled benefits would be cut to roughly 77% of promised levels once reserves are exhausted. Planning around that haircut is the conservative move. The tax-smart delay strategy is where younger workers can actually claw back some of the lost income.

Here is the mechanic. When you retire at, say, 65 but wait to claim Social Security until 70, you create what the host called “a window of years with lower income because we’ve retired, Social Security hasn’t kicked in yet, RMDs from retirement accounts have not kicked in yet.” Required minimum distributions now begin at 73 for most workers. That gives you a multi-year valley of artificially low taxable income.

Run the numbers on a realistic case. A 65-year-old couple with $1.2 million in a traditional 401(k), no pension, and Social Security deferred to 70. Their taxable income from non-retirement sources might be $20,000. The 2026 standard deduction for a married couple filing jointly is roughly $31,500. They have headroom to convert traditional 401(k) dollars into a Roth IRA and pay tax in the 12% bracket on the next chunk, all the way up to about $96,950 of taxable income before hitting the 22% bracket.

Convert $75,000 a year for five years and you move $375,000 into a Roth at an effective federal rate near 10% to 12%. Leave that same money in the traditional account, claim Social Security at 65, and at 73 your RMDs stack on top of full Social Security, pushing combined income into the 22% or 24% bracket. The delay window is the only chance to move that money cheaply.

The second tax benefit is structural. Only 85% of Social Security can be included in your taxable income at the federal level, and many states exempt it entirely. A dollar of Social Security is worth more after tax than a dollar of traditional IRA withdrawal. Delaying boosts the benefit (roughly 8% per year between full retirement age and 70) and you get that bigger check in the most tax-favored form of retirement income available.

The variable: your current marginal tax rate

The whole strategy hinges on whether your tax rate today is higher or lower than the rate you will face in retirement. If you are a 35-year-old in the 24% federal bracket with strong earnings growth ahead, the math for Roth conversions later still works, but contributing to a Roth 401(k) now may not. If you are 55, in the 32% bracket, planning to retire at 62 in a no-income-tax state, traditional contributions today and conversions in the gap years are clearly superior.

The host noted that proximity to retirement matters, since cuts to current recipients would be politically toxic. If you are within 10 years of claiming, plan on receiving close to the full benefit. If you are 25, plan on 77%.

What to actually do this month

1. Pull your latest statement at ssa.gov and multiply the projected benefit by 0.77. Rebuild your retirement income spreadsheet using that figure as your baseline.
2. Map your projected taxable income year by year from your planned retirement date through age 73. Identify the low-income window between retirement and the start of RMDs and Social Security.
3. Compare your current marginal rate to the projected rate in that window. If today’s rate is higher, lean traditional now and convert later. If lower, lean Roth now.
4. Recheck the plan every two years. The fed funds rate is almost 4% and the 10-year Treasury yields almost 5%, both of which shift the cost-benefit on holding cash through the conversion years.

Plan as if Congress does nothing. If they fix it, you retire with a bonus. If they don’t, you are not the one caught short.