'The cost of waiting is only getting higher': BlackRock's Larry Fink says Social Security needs an overhaul so Americans can grow wealth

And with the Congressional Budget Office (CBO) predicting the program, as it stands, will only pay out full benefits until 2032 (2), Fink — who previously wrote about Social Security and retirement in 2024 — believes an overhaul is overdue.

“In my 50 years in finance, if there’s one thing I’ve learned, it’s that the problems we don't talk about are the ones that should worry us most,” he wrote in his chairman’s letter to investors. “And that’s exactly why we need the conversation now — because the cost of waiting is only getting higher.”

Why Social Security is in danger of running out

Around 69 million Americans receive Social Security benefits each month (2), which works out to roughly $1.6 trillion a year funded through a payroll tax of 6.2% each for employees and their employer (3), up to a maximum salary of $184,500 (4). Self-employed workers pay the full 12.4% tax.

Nearly 80% of Social Security went to retirees and their dependents in 2024, while disabled workers and survivors of deceased workers also receive benefits.

However, Social Security funds are running low for various reasons, including the exodus of the baby boomer generation from the workforce — meaning fewer workers to pay into the pot — and increasing life expectancy, which requires more benefits paid for longer periods.

“In 1960, there were more than five workers paying Social Security taxes per beneficiary,” according to the Bipartisan Policy Center (5), with that number “projected to decline to less than 2.5-to-one by the middle of the century.”

Furthermore, the non-profit Roosevelt Institute added that (67), “rising earnings inequality quietly eroded the tax base.” That, the institute says, is a result of the number of wealthy Americans making above the Social Security cap growing between the early 1980s and the 2000s, which “deprived the [Social Security] Trust Fund of payroll tax revenue for decades and reduced the interest it would have earned at precisely the moment it was supposed to be building reserves.”

Now, the CBO warns that after 2032, when the capacity to pay full benefits expires, Social Security recipients could take a 28% average cut in benefits in the ensuing years (7). The Economic Policy Innovation Center did the math based on those numbers, showing a possible loss of monthly benefits between $400 to $1200 for beneficiaries (8).

Exploring ways to shore up Social Security

Various ideas have been floated to get Social Security funds back on track and avoid the 2032 benefits cliff.

Fink, for his part (1), recommended investing a portion of Social Security funds “more like other long-term pension plans — carefully, broadly, and over decades.” He likened the concept to the federal Thrift Savings Plan, while pointing to a 2025 proposal from Senators Bill Cassidy and Tim Kaine that advised creating a fund parallel to the Social Security Trust Fund “that would be invested in stocks, bonds and other investments that generate a higher rate of return, helping keep the program from running dry (9).”

The senators said their idea would require $1.5 trillion to start and 75 years to grow.

A recent Penn Wharton Budget Model mapped out five possible options, ranging from increasing revenues by raising the minimum taxable income to $250,000 to a model that leaves the tax rate where it is but raises the retirement age to 69 (10). And the libertarian Cato Institute recommends turning to other countries for inspiration (11), including transitioning Social Security “into a targeted anti-poverty program, similar to New Zealand’s Superannuation” and “increasing Social Security eligibility ages and indexing them to life expectancy, as Sweden has done.”