Social Security Has a Worsening Income Inequality Problem -- and Retirees May End Up Paying the Price

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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat($n)),notifLabel:document.querySelector(".".concat(Xn))};t.notifDropdown&&so(e,t)}))}()}};]]>Sean Williams, The Motley FoolSun, February 22, 2026 at 10:04 AM GMT+1 7 min readSocial Security wrapped up a history-making year in 2025.For the first time in Social Security's 90-year history, we witnessed the average monthly retired-worker benefit surpass $2,000. Additionally, the 2.7% cost-of-living adjustment (COLA) passed along to the program's more than 70 million traditional beneficiaries in 2026 marked the fifth consecutive year in which benefits rose by at least 2.5%. That hasn't happened in nearly three decades.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »Despite this history, the financial bedrock of America's foremost retirement program is crumbling before our eyes. Although several factors are responsible for Social Security's worsening financial outlook, the program's income inequality problem can no longer be ignored.Image source: Getty Images.Every year since the first retired-worker benefit check was mailed in January 1940, the Social Security Board of Trustees has released a report examining the financial state of the program. This lengthy report details how it brings in income and tracks where those dollars end up.The annual Trustees Report also makes forward-looking projections. The 2025 Social Security Trustees Report estimates that the program faces a $25.1 trillion long-term unfunded obligation. In simpler terms, the projected income collected in the 75 years following the release of a report is expected to fall short of forecasted outlays, including annual COLAs, by $25.1 trillion.However, this isn't the most immediate concern for Social Security or its retired beneficiaries.According to the 2025 Trustees Report, the Old-Age and Survivors Insurance trust fund (OASI) is projected to exhaust its asset reserves -- the excess income collected since inception that's invested in special-issue, interest-bearing government bonds, as required by law -- by 2033. The OASI is the fund that doles out monthly benefits to retired workers and survivors of deceased workers.The silver lining is that the OASI doesn't need any money in its reserve to continue paying eligible beneficiaries. In other words, Social Security isn't in danger of bankruptcy or of halting benefits. But the projected depletion of the OASI's asset reserves would signal that the existing payout schedule, including COLAs, isn't sustainable.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,843.80 -65.71 (-0.95%)Dow 3048,899.74 -726.23 (-1.46%)Nasdaq22,648.49 -237.58 (-1.04%)Russell 20002,602.38 -61.40 (-2.30%)VIX21.53 +2.44 (+12.77%)Gold5,226.10 +145.20 (+2.86%)Trending tickersBTC-USD Bitcoin USD 64,830.37 -2,526.63 (-3.75%)NVO Novo Nordisk A/S 40.03 -7.39 (-15.59%)PYPL PayPal Holdings, Inc. 44.35 +2.70 (+6.48%)CRWD CrowdStrike Holdings, Inc. 348.22 -40.38 (-10.39%)AXP American Express Company 319.24 -26.95 (-7.78%)PortfolioSign in to access your portfolioSign inTop gainersACLX Arcellx, Inc. 113.75 +49.64 (+77.43%)IBRX ImmunityBio, Inc. 9.83 +1.12 (+12.92%)VRE Veris Residential, Inc. 18.82 +2.05 (+12.22%)VKTX Viking Therapeutics, Inc. 34.02 +2.99 (+9.64%)FSM Fortuna Mining Corp. 13.12 +0.85 (+6.93%)Top losersNVO Novo Nordisk A/S 40.01 -7.41 (-15.64%)COMP Compass, Inc. 9.07 -1.23 (-11.95%)RNG RingCentral, Inc. 34.88 -4.62 (-11.69%)MDB MongoDB, Inc. 306.85 -37.71 (-10.94%)TENB Tenable Holdings, Inc. 17.83 -2.08 (-10.47%)Most activeNVDA NVIDIA Corporation 191.06 +1.24 (+0.65%)NVO Novo Nordisk A/S 40.01 -7.41 (-15.64%)IBRX ImmunityBio, Inc. 9.83 +1.12 (+12.92%)SOFI SoFi Technologies, Inc. 18.11 -0.91 (-4.79%)PYPL PayPal Holdings, Inc. 44.20 +2.55 (+6.12%)Top economic eventsEarnings eventsMy earnings eventsEarnings events