Six years.
That is roughly how long Social Security's retirement trust fund has left, according to the 2026 Trustees Report.
After that, the math changes. If Congress does nothing, the program would only be able to pay about 78% of scheduled benefits starting in 2032.
Here is what almost nobody says out loud: you do not have to wait and see how this plays out. You can build your retirement plan today as if the reduction already happened, and let any relief Congress eventually delivers be a bonus instead of a rescue.
At King Legacy Group, we treat Social Security's solvency risk the same way we treat market risk: not as a reason to panic, but as a variable to design around.
What the Trustees Report Actually Says
Every year, the trustees of the Social Security program (the government officials required by law to publicly report on its finances) publish a report on how much money is coming in from payroll taxes and how much is going out in benefits. The 2026 report shows the combined reserves fell by $160 billion in 2025, down to $2.56 trillion.
The report also tracks something called the 75-year solvency gap, which is the difference between what the program is expected to collect and what it is expected to pay out over the next 75 years, expressed as a percentage of covered payroll (the total wages the payroll tax applies to). That gap widened to 4.42% of covered payroll in this year's report. A wider gap means the shortfall is growing, not shrinking.
It is worth being precise about what trust fund depletion actually means, because the headlines rarely are. Depletion of the trust fund does not mean Social Security stops paying benefits. Payroll taxes continue to flow in every year, and that ongoing revenue alone is projected to cover about 78% of scheduled benefits once the reserve is gone. The trust fund is a savings cushion, not the program's only source of money. Losing the cushion means a reduction, not a shutdown.
A bipartisan group of Senators has introduced a reform proposal aimed at forcing a structured process for addressing the shortfall before it arrives. Congress has fixed Social Security's finances before, and it may do so again. But no one, including the people writing that legislation, can promise a specific outcome six years out. Waiting on a guaranteed fix is not a plan.
This is not a reason for panic. Headline-driven fear tends to produce either paralysis or overreaction, neither of which helps a household actually reach retirement securely. It is, however, a reason to plan with a margin of safety built in. That is a very different response than assuming the worst and giving up on Social Security altogether, or assuming nothing will change and building no cushion at all.
The 78 Percent Math, Applied to a Real Number
Numbers become real when they are attached to a real benefit. Take a projected Social Security benefit of $3,200 per month, a figure in range for a W-2 professional with a solid, multi-decade earnings history.
At the projected 78% payment level, that same benefit becomes $2,496 per month, a gap of $704 every month, or $8,448 a year. Stretched across a 25 to 30 year retirement, that gap adds up to well over $200,000 in income that a household may have counted on but never receives.
That number is the whole point of this article. It is small enough to plan around and large enough to matter. A $704 monthly shortfall is not the end of a retirement plan. It is a line item, and line items can be funded.
A Quick Provisional Income Explainer
There is a second reason the source of your gap-filling income matters, beyond simply closing the dollar amount. It comes down to a number called provisional income, which is the figure the Internal Revenue Service uses to decide how much of the Social Security benefit you do receive gets taxed.
Provisional income equals your adjusted gross income, plus any tax-free interest you earned, plus half of your annual Social Security benefit. Cross certain thresholds, and up to 85 percent of your benefit becomes taxable. Withdrawals from traditional retirement accounts count toward that number. Tax-free income sources generally do not.
That means the way you fill a Social Security gap is not a minor detail. Fill it with more taxable withdrawals, and you risk pushing more of your reduced benefit into taxable territory on top of the reduction itself. Fill it with tax-free income instead, and you close the gap without compounding the problem. We cover the mechanics of provisional income in more depth in Keep More of Your Social Security; the short version here is enough to understand why the strategy below leans on tax-free tools.
The Strategy: Stress-Test First, Choose Tools Second
Strategy leads every recommendation at King Legacy Group. Products only enter the conversation once the strategy is set, because products change as carriers update rates and rules, while a sound strategy holds up regardless of which specific tools eventually execute it.
Layer One: Run the stress test. Take your projected Social Security benefit and rerun your retirement plan assuming you only receive 75% to 80% of it. Do not treat this as a prediction. Treat it as a margin of safety, the same way an engineer designs a bridge to hold more weight than it will ever actually carry. If your plan still works comfortably at a 78% benefit level, a full benefit becomes a pleasant surplus rather than a required assumption.
Layer Two: Fill the identified gap with two complementary income sources.
A 7702 account, named for the section of the Internal Revenue Code that governs it, the same way the industry named the 401(k) after its own code section, is the first tool. Properly structured, tax-free loans from a 7702 account can supply spendable retirement income without adding to your provisional income, which means it fills the Social Security gap without dragging more of your reduced benefit into taxable territory.
A Fixed Index Annuity is the second tool. It is a contract with an insurance company that protects the underlying value from market losses while offering the option of guaranteed income you cannot outlive. Positioned correctly, it can function as a private pension that steps in specifically to cover the portion of Social Security that solvency risk puts in question.
Layered together, a 7702 account and a Fixed Index Annuity give a household two separate, non-market-dependent sources of income aimed at one specific job: replacing exactly the portion of Social Security that a 78% payment level would take away. The specific product design, funding amount, and carrier are chosen in a consultation, based on your age, timeline, and existing assets. The strategy of stress-testing and layering comes first, always.
A Worked Example
The following is a fictional, composite scenario for educational purposes only. It does not represent any actual client or client result.
Consider a hypothetical W-2 professional, age 45, with a Social Security statement projecting a $3,200 monthly benefit at full retirement age.
Running the stress test, her advisor rebuilds her retirement plan around a projected benefit of $2,496 per month, a $704 monthly shortfall against her statement. Rather than hoping the shortfall never materializes, she puts a plan in place over her remaining twenty working years.
She begins funding a 7702 account, structured to build tax-free loan capacity by the time she retires. In her final decade of work, she also allocates a portion of her portfolio toward a Fixed Index Annuity, timed to begin guaranteed income at retirement. By the time she retires, the combined tax-free income from her 7702 account and the guaranteed payout from her Fixed Index Annuity are designed to cover the full $704 monthly gap, with a buffer left over.
If Congress ultimately prevents the reduction and her full benefit arrives, she simply has extra income and extra flexibility. If the reduction does happen, her retirement lifestyle does not change. That is the outcome a stress-tested plan is built to deliver: the same result either way.
The figures here are illustrative and simplified. Every household's timeline, funding capacity, and goals are different, and the right mix of tools depends on those specifics.
Frequently Asked Questions
How should I plan for retirement if Social Security benefits are cut in 2032?
Rebuild your retirement income projections assuming you receive only 75% to 80% of your scheduled Social Security benefit, then identify the resulting monthly gap. Fill that gap with income sources that do not depend on Congress or the markets, such as tax-free income from a 7702 account and guaranteed lifetime income from a Fixed Index Annuity. If the projected reduction never happens, you end up with more income than planned. If it does happen, your lifestyle stays the same.
Will Social Security really only pay 78 percent of benefits in 2032?
The 78% figure is a projection based on current law and current trends, not a certainty. It assumes Congress makes no changes before the trust fund is depleted. Lawmakers have addressed Social Security's finances before, and a bipartisan Senate reform proposal is currently aimed at doing so again. Nobody can guarantee the outcome six years in advance, which is exactly why building a plan around the more conservative number is the prudent approach.
What is a 7702 account?
A 7702 account is a tax-advantaged account named after the section of the Internal Revenue Code that governs it, similar to how the 401(k) is named after its own code section. When properly structured and funded, it can provide tax-free retirement income through policy loans, without adding to the provisional income figure that determines how much of your Social Security is taxed.
What is a Fixed Index Annuity?
A Fixed Index Annuity is a contract with an insurance company that protects your money from market losses while offering the option of guaranteed income for life. It can function like a private pension, and in the context of Social Security solvency risk, it can be structured to specifically replace income that a future benefit reduction would take away.
Does this mean I should stop counting on Social Security altogether?
No. Social Security remains a meaningful, likely lifelong source of retirement income for most households, even under the projected reduction. The goal of this strategy is not to write off the benefit. It is to plan with a margin of safety so that a reduction, if it happens, does not force a change in your lifestyle.
Your Next Step
The households that come through a Social Security benefit reduction unaffected are not the ones who hoped it would not happen. They are the ones who planned as if it already had. King Legacy Group builds retirement income plans with that margin of safety built in from the start.
Ready to stress-test your retirement plan? Schedule your strategy review here.
Complimentary. No pressure. A clear path to your LivingLEGACY™.
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