Former Treasury Secretary Jack Lew stated during a media appearance this week that Social Security faces a significant funding challenge that will require attention during the upcoming presidential term. The program’s primary trust fund is projected to exhaust its reserves in the fourth quarter of 2032, at which point it would only be able to pay 78% of scheduled benefits, according to Social Security trustees’ projections released in June. When combined with disability trust funds, the program could sustain full benefit payments until the third quarter of 2034, when it would cover 83% of scheduled benefits.
The mounting pressures on Social Security stem from demographic trends, as a record number of Americans reach retirement age, increasing demand for benefits. The program currently serves more than 75 million Americans, including retirees, disabled individuals, and their family members. Broader entitlement spending has risen substantially, with Social Security, Medicare, and Medicaid payments increasing 7% in the first 11 months of fiscal year 2026, driven by higher benefit amounts and increased enrollment across these programs.
Lew recommended that political candidates keep reform options available and emphasized that Congress should initiate discussions about solutions before the depletion date arrives. He noted that lawmakers could draw inspiration from the bipartisan approach used in 1983, when President Ronald Reagan signed major program reforms into law, which included adjusting taxes on benefits and raising the retirement age. Lew expressed skepticism about proposals to invest Social Security reserves in stock markets, citing concerns about government ownership of private businesses and market uncertainty.
Potential reform approaches may include examining the wage base subject to payroll taxes, which currently covers wages up to $184,500 in 2026, and assessing whether current tax revenue will be sufficient to meet future obligations. Lew stressed that finding solutions becomes increasingly difficult as the depletion date approaches, making timely legislative action advisable. He called for a collaborative process that remains receptive to various reform proposals.
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