Warren Buffett drew a clear line on Social Security more than 20 years ago.
“I basically believe that anything that would take Social Security payments below their present guaranteed level is a mistake,” he said at Berkshire Hathaway’s 2005 annual meeting.
That line is now in danger of being crossed. The Congressional Budget Office said on Sept. 17 that the retirement trust fund could run dry in 2032, and it put the resulting benefit cut at 26%, deeper than the 22% the program’s trustees projected.
That would shrink checks for millions of retirees who are counting on them the most.
Warren Buffett saw Social Security as a duty
For Buffett, the program was never just a line item in the budget. “A rich country takes care of its young and it takes care of its old,” he told shareholders in 2005, adding that a rich country “should be doing the same for the older people” as it does for children.
He compared support for retirees to the tax credits and incentives that help children, another group that cannot work because of age. In his view, people in their working years can afford to look after both, and doing so is part of a wealthy nation’s basic responsibility.
Also read: Suze Orman has a serious retirement warning for 2027
Buffett also offered ways to keep the promise. He suggested raising the retirement age and eliminating the income cap on payroll taxes, which sits at $184,500 this year. The former slows how fast benefits are paid out, while the latter brings more money into the system.
That cap keeps climbing on its own. The Social Security Administration said the maximum taxable earnings will rise to $192,300 in 2027, while benefits will get a 3.6% cost-of-living adjustment (COLA). The average retired worker’s check will rise by about $75 a month starting in January, according to the Social Security Administration.
Still, a higher cap is not the same as removing it, which is what Buffett suggested.
The 2032 deadline is getting closer
The trustees’ own numbers are troubling enough. Their 2026 report shows the retirement trust fund running out of reserves in late 2032, after which incoming payroll taxes would cover only about 78% of scheduled benefits.
Lower fertility and immigration assumptions, along with the One Big Beautiful Bill Act, which cut taxes on Social Security income and the revenue flowing to the fund, pushed the date closer.
That law has added to the strain. The One Big Beautiful Bill Act adds $168.6 billion in net costs to the trust funds through 2034, according to Social Security’s chief actuary, and Peter G. Peterson Foundation CEO Michael Peterson warned that “all Social Security recipients will face automatic, immediate benefit cuts of 22% in 2032,” as reported by TheStreet.
The CBO’s view is even darker. It keeps the same 2032 timeline but deepens the projected cut to 26%. And the trustees had previously expected benefits to be paid through 2033. Depletion would not stop checks entirely, since the ongoing payroll taxes would still fund a reduced amount.
For a typical retiree, that is real money. Based on the current average retired worker benefit of $2,088.79, a 26% cut would mean about $543 less every month.
For retirees who lean on Social Security for much of their income, that gap would be hard to absorb. It is exactly the kind of drop Buffett called a mistake, according to the Social Security Administration.
Washington is running out of time
Lawmakers have fixed this problem before. The last major overhaul came in 1983, and since then the share of covered wages subject to the payroll tax has slipped to about 83%, down from 90% back then, as reported by TheStreet.
That slide is the gap Buffett’s cap idea was meant to close. The options on the table today look a lot like his, including raising the payroll tax, adjusting the wage cap and lifting the retirement age, and every year Congress waits makes the fix harder.
More Social Security:
- Social Security’s next COLA could erode on arrival
- Social Security’s estimator makes one costly assumption
- Social Security’s biggest check locks out most retirees
The math is not getting easier. There were 5.1 workers for every beneficiary in 1960, but only 2.7 in 2024. The American Academy of Actuaries says that closing the gap would take either an immediate payroll tax hike of 3.65 percentage points or an immediate benefit cut of 22.4%, Yahoo Finance reported. Neither option is easy to sell to voters.
Political gridlock makes a quick deal unlikely. With entitlement reform stuck, many Americans may need to take steps on their own to protect their retirement. That shifts more of the burden onto individual savers.
Buffett’s other lesson for savers
Building a personal cushion is the obvious place to start. A financial planner can help diversify income beyond Social Security, and saving more in 401(k)s, IRAs, or a Health Savings Account (HSA) can also help. Delaying retirement is another option worth considering for those who are able.
Warren Buffett has given advice on that front, too.
In his 2016 letter, he wrote that “my regular recommendation has been a low-cost S&P 500 index fund,” and in 2013 he said the cash he leaves his wife should go 90% into such a fund and 10% into short-term government bonds. He expected that approach to beat most investors who pay high-fee managers.
He also stressed keeping fees low, saying “costs really matter in investments.” The 90/10 split was meant for his estate, not as a formula for everyone. Investors should build an emergency fund first, and an S&P 500 fund holds no foreign companies, TheStreet reported.
Two decades later, Buffett’s warning about cuts and his advice on saving point the same way. Both rest on the idea that a secure retirement should not be left to chance.
Related: AARP cuts to the chase on 2027 Social Security COLA