The deadline: The Congressional Budget Office estimates the Social Security trust fund will run out of money by fiscal year 2032 (starting October 2031) — if Congress takes no action, a typical couple aged 60 today would face an $18,400 benefit cut at retirement.

The temptation: Instead of making tough choices like cutting benefits or raising taxes, Congress may try to finance Social Security's shortfall with borrowed money — but economist Veronique de Rugy warns markets would react immediately with inflation, not wait for debt to pile up.

The consequences: If Congress commits to a debt-financed path, investors could reprice U.S. debt right away, triggering rapid inflation and forcing the Federal Reserve into a no-win situation: hike rates to fight inflation while driving up debt costs, or tolerate higher inflation to avoid worsening the debt crisis.

The crisis: Social Security's trust fund is approaching insolvency and will soon transition to paying benefits directly from payroll taxes, meaning promised benefits will exceed available funding and cuts are coming.

Double trouble: Personal savings rates have dropped from 6.2% in early 2024 to just 4.2% by mid-2025, leaving households with no financial buffer when benefit cuts arrive — and each year of reduced benefits compounds with 2.16% annual inflation.

Action steps: Delay claiming benefits past full retirement age for an 8% annual increase until age 70, maximize your earnings now to increase your benefit base, and build dedicated retirement savings through a 401(k) or IRA to bridge the gap.

The penalty: If you don't sign up for Medicare on time, you'll face a 10% surcharge on your Part B premiums for each 12-month period you were eligible but didn't enroll — and that surcharge stays with you for life.

The exception: If you're still working at 65 with qualifying group health coverage (usually plans with 20+ employees), you can delay enrollment without penalties and get an eight-month special enrollment period after leaving that job.

What doesn't qualify: COBRA, retiree insurance plans, and Health Insurance Marketplace plans do NOT count as qualifying coverage for a special enrollment period — if you have these plans, you must sign up during your initial seven-month enrollment window to avoid surcharges.