Passage of OBBBA Deepens Social Security’s Funding Hole

This post is a follow-up to our post of June 18, 2025 in which we addressed the magnitude of Social Security’s long-term funding hole based on results of the 2025 Trustees Report and their “intermediate assumptions.” Last week, Karen P. Glenn, the Chief Actuary of the Social Security Administration (SSA) updated the primary 2025 results in a letter to Senator Ron Wyden reflecting SSA’s understanding of the tax provisions in the One Big Beautiful Bill Act (OBBBA). 

Primary Reason Why Lifetime Income Products are Generally Better Investments for Retirees than Bonds

We advocate a Safety First (or Liability-Driven) Investment strategy for retired households which anticipates the use of relatively low-risk investments to fund future Essential Expenses (the Floor Portfolio) and higher-risk investments to fund future Discretionary Expenses (the Upside Portfolio). The non-risky assets/investments we advocate for the Floor Portfolio include:

• Social Security benefits
• Pension benefits
• Lifetime income annuities (SPIAs and DIAs)
• Tips ladders, and
• Non-lifetime fixed annuities

The first three items above (including deferring commencement of Social Security benefits) can be considered as lifetime income products for the purpose of this post.