Republicans and Democrats don’t concur on many things these days, but on one point they increasingly agree: Social Security is a mess. The latest evidence comes from a viral Washington Post story reporting that the government’s retirement program “ends the year in turmoil.”
The story touches on the program’s many problems heading into 2026: a multimillion-case backlog, field offices buried under record transaction volumes, and customer service in disarray, with average callback wait times exceeding an hour.
“It was not good before, don’t get me wrong,” John Pfannenstein, a claims specialist, told the outlet. “But the cracks are more than beginning to show.”
While some of President Donald Trump’s Department of Government Efficiency-inspired reform efforts may have added to the chaos, Social Security’s problems extend well beyond recently reported case backlogs and poor customer service.
Waiting an hour for a bureaucrat to return a phone call is frustrating, but it pales in comparison to a $25 trillion funding hole. And while the president might want to take credit for everything, it’s not fair to lay this disaster at his feet.
Social Security is facing insolvency, the Bipartisan Policy Center noted. Its primary trust fund is projected to be depleted by 2033.
“Policymakers from both parties have known for decades that Social Security’s finances are unsustainable but have consistently failed to act,” the report says, “leaving the program an estimated $25 trillion short over the next 75 years.”
Blaming the president for this entitlement mess may have political appeal, but the truth is harder to swallow. After all, Social Security has not undergone serious reform since 1983.
There were attempts, of course. Former President Bill Clinton led a reform effort in the late 1990s based on Chile’s model of individual accounts, but it collapsed amid impeachment drama. Seven years later, I was working in the White House speechwriting office when former President George W. Bush launched a national tour promoting Social Security reform. That plan also went nowhere, largely because of partisanship.
That was a missed opportunity. Economist Andrew Biggs recently noted that the Bush proposal would have pushed Social Security’s insolvency back by about a decade, reduced long-term funding gaps by roughly one-third, and preserved benefits for most retirees — especially those most dependent on the program. (A recurring theme of the Bush years was that his worst ideas were implemented, while his best ones went nowhere.)
Politicians will continue to blame each other for Social Security’s problems. But at least the country has finally reached a point where nearly everyone agrees the system is broken.
This stands in stark contrast to America’s other major retirement program, the 401(k). Unlike Social Security, 401(k)s are not an entitlement program managed by the U.S. government. They are tax-advantaged accounts, individually and privately owned by workers, and controlled by their employers and financial advisers. Benefits are tied directly to contributions (and prudent management) rather than political promises.
Named after the section of the tax code that created them, 401(k)s were criticized for years for shifting responsibility from government to individuals and exposing retirement savings to the stock market, which critics often portrayed as confusing — or even a casino.
Despite those fears, 401(k)s are thriving. A recent Wall Street Journal article noted that these accounts are “minting a new generation of modest millionaires.”
Firms such as Fidelity, T. Rowe Price, and Alight report record levels of customers with balances exceeding $1 million. Alight, for example, has seen the share of clients with balances above $1 million double in just three years, from 1.3% in 2022 to 2.6% in the third quarter of 2025. Other firms report even higher percentages.
Critics of 401(k)s will object that this is still a small share of participants. But those figures include workers who have only recently begun contributing and young professionals who are right on track for compounding growth.
The truth is that 401(k)s are simply a better retirement vehicle than Social Security, which likely explains why, for the first time, more than half of private-sector workers use them, according to the Wall Street Journal.
FIRST ROUND OF JANUARY SOCIAL SECURITY PAYMENTS GOES OUT IN ONE DAY
The comparison is not even close. One Tax Foundation analysis found that a worker who set aside the equivalent of the payroll tax into a 401(k)-style account would accumulate roughly $719,670 by retirement. When annuitized, that portfolio could generate about $57,319 per year in retirement income. The expected Social Security benefit: $19,646.
Critics will argue that this assumes consistent stock market returns, which have averaged 10% since inception, all crashes included. Fewer acknowledge that Social Security also rests on an assumption, namely, that the program remains solvent. Even if it does, expected returns are just 4%. Americans will be cashing in 401(k)s long after Social Security has gone bust. That won’t be because Americans did not “invest” sufficiently in Social Security. It will happen because one system relies on individual ownership. The other relies on political promises and asks a shrinking workforce to fund a program that increasingly resembles a Ponzi scheme.
Jon Miltimore is senior editor at the American Institute for Economic Research. Follow him on Substack.