Listen to “Entrepreneurship Could Fix Social Security Problem” on Spreaker.
The problem is well known. Social Security benefits now exceed payroll tax revenue. More money is going out than coming in, with the difference made up from the program’s trust fund reserves. Those reserves continue to dwindle. According to the 2026 Social Security Trustees Report, the retirement trust fund is now projected to be depleted in late 2032.
Beginning around 2033, Social Security would still collect enough payroll tax revenue to pay roughly 78% of scheduled retirement benefits. Unless Congress acts, current law would require an automatic reduction of about 22% in benefits.
Hoppy Kercheval recently outlined several options for addressing the problem. Read it here.
Perhaps to the surprise of no one, this pen finds little confidence in Washington fixing anything. Years of watching Congress fumble one challenge after another have left many Americans skeptical that elected officials will solve one of the most politically sensitive issues in government.
Perhaps part of the solution isn’t found in Washington at all.
Enter entrepreneurship.
According to The Wall Street Journal, the number of entrepreneurs between the ages of 55 and 64 who incorporated new businesses increased 22% over the past decade, while the overall population in that age group grew by just 0.6%.
Take Margo Clayson, 68, who operates a small nutrition and food business to supplement her family’s Social Security income. The roughly $800 she nets each month bridges the gap in her household budget, allowing her and her husband to leave both their $5,000 savings account and $60,000 401(k) untouched.
Then there’s Roger Smith of Keller, Texas. After a 35-year corporate career that culminated as a vice president at a large engineering and construction company, Smith decided retirement didn’t have to mean quitting work. With his investments having grown enough to make retirement financially possible, he invested $430,000 — less than 10% of his $5.5 million net worth — to open an indoor golf simulator franchise. He believed he could earn a better long-term return by owning a business than by simply remaining invested in the stock market.
Today, the business generates enough revenue to cover its expenses, including his modest salary and health insurance. His goal is to eventually earn about $10,000 a month while enjoying a flexible schedule centered around his passion for golf, travel, and family.
Margo and Roger represent opposite ends of the entrepreneurial spectrum. One earns hundreds of dollars a month. The other hopes to earn thousands. Yet both demonstrate the same principle: retirement doesn’t have to mean the end of productive work. For many Americans, it can become the beginning of something new.
Social Security was never intended to be the sole source of retirement income, yet for too many Americans it has become just that. One could strongly argue – any basic retirement calculator will give you the numbers – that had the federal government simply invested the 12.4% payroll tax it collected over the decades into a low-cost S&P 500 index fund, many retirees today might enjoy financial independence without any need for government benefits of any kind. That opportunity has long since passed for those retiring today… water under the bridge.
What these retirees are doing instead — leveraging their own talents to continue producing wealth — should be encouraged.
Rather than focusing exclusively on raising payroll taxes or cutting benefits, perhaps policymakers should also be asking how to encourage more entrepreneurship later in life. Why not reduce the self-employment tax burden on retirees who choose to start a business? If someone like Margo paid 6% instead of 12.4%, she could keep more of every dollar she earns, strengthening her own financial independence while continuing to contribute to the economy.
Saving Social Security is a worthy national goal; no argument to the contrary here. But perhaps an equally worthy goal is making it easier for Americans to stand on their own two feet. The more people who are able to generate income, create wealth, and build businesses later in life, the less pressure there will be on a government program that, by itself, can never carry the entire weight of retirement security.