Every paycheck a Gen Z worker receives includes a promise: pay Social Security taxes now, and the program will offer income in retirement. However, recent government forecasts indicate a significant funding gap for Social Security. The retirement trust fund is expected to deplete its reserves by 2032, well before most of Gen Z reaches retirement. This doesn’t mean Social Security will disappear, but benefits may be reduced unless Congress intervenes.
Financial expert Michael Ryan explains, “Gen Z shouldn’t assume Social Security will vanish. The real risk involves smaller benefits, delayed benefits, or higher taxes.” Young Americans should prepare for some retirement income from Social Security, although potentially less than current promises. The extent of their future benefits depends on Congressional actions in the coming years.
Why This Matters
Currently, Gen Z workers contribute to benefits for today’s retirees. In 2026, the Social Security tax will be 6.2 percent on earnings up to $184,500, matched by employers. Self-employed individuals will pay 12.4 percent. Social Security operates mainly as a pay-as-you-go system, where taxes from current workers fund ongoing benefits, while surpluses go into trust funds. The growing number of beneficiaries is outpacing the workforce sustaining them.
Ryan suggests, “The real issue is the uncertainty across an entire working life. Someone in their 20s may make retirement decisions around a program subject to change before they collect any benefits.”
Financial Expert Opinions
Experts argue that while payroll taxes won’t vanish in 2032, and Social Security won’t cease automatically, incoming revenue would cover most, but not all, scheduled benefits. Ryan notes, “The concern isn’t that Social Security will disappear, but that years of planning could be based on uncertain promises.” The difference between scheduled benefits and payable benefits is crucial. Scheduled benefits follow the current formula, whereas payable benefits reflect what the program could sustain with present revenue.
Congress could raise revenue or adjust benefits before reserves deplete. Financial literacy instructor Alex Beene remarks, “Hoping for the best while preparing for the worst suits younger generations and Social Security. The program is highly popular, and its disappearance is unlikely.”
Future Challenges for Gen Z
The Old-Age and Survivors Insurance Trust Fund is predicted to pay full benefits until late 2032. Thereafter, ongoing income would cover 78 percent of scheduled benefits. Gen Z deals with various challenges, like rising college costs and potential tax increases, says Kevin Thompson. Additionally, the retirement age might move from 67 to 70, with possible increases in payroll tax.
Lawmakers have a range of options to resolve the funding gap, but each involves trade-offs. Proposals include raising payroll taxes or altering taxable earnings, revising the benefit formula, or adjusting retirement ages. Ryan warns, “The longer Congress delays action, the harder gradual changes become for younger workers.”
Retirement Planning for Gen Z
Experts suggest Gen Z shouldn’t write off Social Security but should consider it just one part of their retirement income. Drew Powers believes, “Gen Z will still receive Social Security, although it may differ from today’s version.” Establishing an emergency fund and consistently saving part of each paycheck can ease financial pressure in retirement.
Starting Early is Key
Time can be Gen Z’s best ally in retirement planning. An individual who invests $250 monthly from age 22 to 67, with a 6 percent annual return, could accumulate about $735,000. Given that Americans over 65 spend approximately $61,400 annually, such savings could last 12 years if that was the only income.
Beene advises, “Millennials and Gen Z should focus on other retirement vehicles like 401ks or Roth IRAs to address potential Social Security reductions.” The program’s survival likely depends on benefit cuts, higher taxes, and raising the retirement age. Experts agree that Gen Z can reasonably expect some income from Social Security, but they may not receive every dollar as currently scheduled.
Powers states, “Social Security is too cherished to abolish completely, but those under 40 should prepare for a different retirement than previous generations.”
Looking Ahead
Congress has yet to pass any law addressing the shortfall projected in the 2026 Trustees Report. Although Social Security isn’t expected to vanish, full scheduled benefits are uncertain. Experts recommend that younger workers save early and treat Social Security as supplemental income. Thompson points out, “This situation may force many to work longer to achieve full benefits, especially as job automation increases rapidly.”