Social Security's Depletion Date Moved Inside Your Client's Retirement

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"Should I just take it at 62, before they cut it?"

Some version of that question has come up in nearly every Social Security conversation I have had since the trustees released their 2026 report in June. The instinct is understandable. Run the numbers, though, and the defensive claim is a far smaller hedge than it seems — and a permanent one.

What Changed in June

The trustees now project that the Old-Age and Survivors Insurance (OASI) trust fund will be depleted in the fourth quarter of 2032, one quarter earlier than last year's estimate. From that point, continuing income would pay 78% of scheduled retirement benefits. The combined retirement and disability funds still last until 2034, with 83% payable after that. The long view got worse, too. The 75-year actuarial deficit rose to 4.42% of taxable payroll from 3.82%.

A client who turns 65 this year will be 71 when that projection comes due. It sits inside the plan we are writing today.

Fewer Workers, Slower Growth

Alicia Munnell of the Center for Retirement Research at Boston College traces the deterioration to three revenue hits. The trustees cut their ultimate fertility assumption from 1.90 to 1.75 children per woman, still above the current U.S. rate of 1.59. They lowered projected net immigration. And the 2025 tax law reduces what the trust funds collect from taxing benefits. Those lower revenues, Munnell writes, "more than explain" the wider deficit, which would have been larger still without offsetting assumptions such as faster productivity growth.

The same inputs drive long-run growth forecasts, since potential GDP growth is roughly labor force growth plus productivity growth. The Congressional Budget Office projects that deaths will exceed births in 2030, leaving net immigration as the only source of population growth after that year. An advisor who trims long-run return assumptions for demographic reasons but leaves Social Security at 100% is running two inconsistent assumptions in one plan.

The 30% versus the 22%

For a worker with a full retirement age of 67, filing at age 62 reduces the monthly benefit by 30% for life. The depletion shortfall is 22%, and it applies to whatever benefit the household is receiving when it arrives.

Claiming early does not dodge the cut. It stacks under it. Take 30% off at age 62 and another 22% off in 2032, and the client is living on about 55% of the benefit they would have drawn at age 67.

Here is how I lay it out: Take a single worker born in January 1965 with a primary insurance amount of $2,000 a month. Everything is in today's dollars, so cost-of-living adjustments drop out. No discounting, no earnings test, and the 22% cut starts in October 2032 and is never repaired.

Claim at age 62 in January 2027: $1,400 a month, falling to $1,092 after the cut.
Claim at age 67 in January 2032: $2,000 a month, falling to $1,560.

By October 2032, the early claimer is $78,600 ahead. From then on, the later claimer collects $468 more every month, and the cumulative lines cross at about age 81 years and eight months.

I show clients the next number, too, because it cuts against the case for waiting. Without depletion, breakeven comes at about age 78 years and seven months. The cut pushes it out roughly three years: It shrinks the monthly reward for waiting but leaves the pre-2032 head start untouched. By age 90, the cumulative advantage of waiting falls from $81,600 to $46,356 — still a notable amount. The fear is not irrational. It is mispriced.

That shift has a price. The early claimer gives up $468 a month from age 68 onward, for life. If Congress closes the gap before 2032, the early claimer will have taken a 30% reduction to dodge a cut that never came. For the higher earner in a couple, the delayed benefit also becomes the survivor's benefit, which runs until the survivor’s death. Discounting pushes the breakeven point later, so breakeven real rates matter for clients with short horizons.

Stress-Testing the Plan at 78%

My base case now sets Social Security at 100% through September 2032 and 78% after. I run a second pass lower than that, because the trustees' own projections show the OASI payable share sliding to 62% by 2100.

Then I convert the gap to dollars. A couple with $4,000 a month in combined benefits loses $880 a month, or $10,560 a year. Replacing that at a 4% withdrawal rate takes about $264,000 of capital, which most clients do not have sitting idle, so in most plans the gap lands on spending.

The deposit also falls more than the headline suggests. The standard Medicare Part B premium is $202.90 a month in 2026. If it is still withheld in full, a $2,000 gross benefit nets $1,797.10 today and $1,357.10 after the cut, a 24.5% drop in the money that actually reaches the client's account.

I split spending into an essential floor (housing, food, insurance, health care, and taxes) and everything else. Social Security, pensions, annuity income, or a TIPS ladder should cover the floor at 78%. The rest absorbs the gap. Travel goes first, then gifts to family, then the replacement cycle for cars and major home projects. If the floor itself fails at 78%, that is a design problem to fix now, while there is still time to use savings to defer the claim.

How the Conversation Should Open

Nationwide published a 2026 Social Security survey conducted by The Harris Poll from May 11 to June 4 among 1,823 adults who receive or expect to receive benefits. The study found that 51% of respondents had filed or planned to file as early as possible, often to collect something before the program changes.

Among respondents working with a finance professional, 39% reported having a clear plan for reduced benefits, versus 10% of those not working with an advisor. And 45% of those without a plan said a government announcement of specific changes would prompt them to act. They are waiting.

The 39-to-10 split is a correlation, not proof that advice causes planning. The 45% who are waiting worry me more. A client waiting for Congress may file at age 62, long before Congress acts, and that choice cannot be undone.

So, I no longer open conversations with claiming age. I open with the plan at 78%, before the client asks. Once the floor holds, claiming becomes a longevity question again. Kevin Jestice, president of Nationwide Retirement Solutions, put it plainly in the survey release when he said these decisions "should not be driven by fear or headlines alone."

Thomas Young is an economist who builds models, researches the economy, advises on public policy, speaks at conferences, and enjoys thought leadership.

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