Millions of near-retirees believe Social Security is on the verge of total collapse, which pushes many of them to start collecting benefits at age 62, according to the AARP .
Charles Schwab, one of the largest brokerage firms in the United States, published an analysis on July 9 that directly challenges the “going broke” narrative.
The firm argues that the widespread panic misreads what the program’s most recent financial data reveals about its longer-term outlook.
Filing at the earliest eligible age permanently reduces monthly checks, and Schwab warns that fear alone makes for a poor basis for that irreversible choice.
What the 2026 Trustees Report reveals about Social Security’s reserves
The Old-Age and Survivors Insurance trust fund, which covers retirement benefits, is now projected to deplete its reserves by the fourth quarter of 2032.
That timeline shifted forward by one quarter compared with the previous year’s projection, according to the latest annual report from the program’s trustees.
At that point, incoming payroll tax revenue would still cover 78% of scheduled retirement benefits, not zero, Schwab’s analysis noted.
Social Security operates as a pay-as-you-go system funded by Federal Insurance Contributions Act taxes, which means payments would continue as long as workers contribute, AARP reported.
Annual outflows now exceed annual inflows because the retiree population is expanding faster than the working population paying into the system.
Schwab’s analysis emphasizes that a funding gap is not the same as program elimination, a point the firm says is essential for anyone weighing an early Social Security claim.
The program’s financial outlook worsened in 2026
Several demographic and policy shifts widened the financing gap between 2025 and 2026, and the changes reveal structural vulnerabilities in the program’s revenue base, the Center for Retirement Research at Boston College reported.
Trustees lowered the long-run fertility estimate from 1.90 children per woman to 1.75, reflecting persistent declines in birth rates across the United States.
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Reduced immigration projections also cut into projected payroll tax collections, and the One Big Beautiful Bill Act lowered expected revenue from benefit taxation. The 75-year financing gap widened to 4.42% of taxable payroll from 3.82% a year earlier.
Alicia Munnell, Senior Advisor at the Center for Retirement Research, wrote that the changes needed to restore balance are “well within the bounds of fluctuations in spending on other programs.”
How claiming Social Security at 62 out of fear can permanently reduce income
Claiming at 62 permanently reduces monthly benefits, since the full retirement age for anyone born in 1960 or later is 67, not 62, the SSA noted.
That reduction can reach up to 30%, and every future cost-of-living adjustment (COLA) compounds from the lower starting base for the rest of the recipient’s life.
Steve Sexton, chief executive officer of advisory firm Sexton Advisory Group, has warned that many retirees file at 62 “without fully understanding what they’re giving up.”
He told The Independent that he has worked with clients who claimed early and later realized they had underestimated how long they would live or how expensive retirement would actually be.
Joe Elsasser, certified financial planner and president of Social Security claiming software company Covisum, told CNBC that many near-retirees frame the decision incorrectly by focusing on average life expectancy.
By starting with the question, ‘How long could I live?’ prospective beneficiaries will get a different answer than by asking, ‘How long will I live?
The Schwab analysts argued that the claiming decision depends on health, income needs, expected lifespan, and marital status, not on trust fund headlines alone.
The firm recommended using anxiety about the program’s future as motivation to save more rather than as a reason to lock in reduced benefits.
How Congress could close Social Security’s funding gap before 2032
Lawmakers have multiple options to shore up the program before the retirement trust fund reaches its projected depletion date, the Schwab report noted.
An immediate payroll tax increase of 4.42 percentage points, split between workers and employers, would fund full benefits through 2100, the program’s trustees projected.
The 2026 class of senators will be the first federally elected group that must confront the program’s depletion dates within their six-year term, Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center, told CNBC.
That alignment between the political calendar and the financial deadline may increase pressure on Congress to act before it automatically cuts benefits.
Why savings gaps matter for near-retirees weighing their options
A 2025 survey from insurance company Allianz Life found that 55% of Americans still incorrectly believe the Social Security full retirement age is 65.
That misunderstanding, combined with trust fund fears, creates conditions where people are far more likely to claim too early and receive less over their lifetimes.
If only tax revenues funded the program, the typical age-65 retiree’s income replacement rate would drop immediately from about 36% to about 29%, according to the Center for Retirement Research at Boston College.
Schwab’s analysts noted that additional savings through employer-sponsored retirement accounts, individual retirement accounts, and diversified investment portfolios can help cover expenses beyond what Social Security provides
About 96% of Americans view Social Security as important, regardless of political affiliation, a June 2025 AARP survey of public attitudes confirmed.
Schwab’s message to those nearing retirement is clear: treat the shortfall as a signal to prepare, not as a reason to grab smaller checks today.
Related: AARP study addresses common fear that Social Security will end
