July 2026 Newsletter: What Washington's Proposed Social Security Bills Mean for Your Retirement

As your partner in planning for long-term financial security, we closely monitor legislative shifts that could affect your retirement strategy. Recently, the Social Security Board of Trustees released its 2026 report, shifting the projected depletion date for the primary retirement trust fund up tolate 2032.

While this projection is important, it is not a prediction of collapse. Congress has intervened every time Social Security has approached a funding shortfall — most notably in 1983 — and lawmakers have multiple viable tools available today. If Congress takes no action, the trust‑fund depletion would trigger an automatic benefit reduction of roughly 22% to 25%. However, several legislative proposals are already on the table, each offering a different path toward long‑term solvency.

Below is a breakdown of the primary bills currently being debated in Congress and what they could mean for your financial plan:

1.The Senior Citizens’ Freedom to Work Act of 2026

This proposal aims to rewrite the rules for retirees who choose to stay in the workforce while drawing early benefits.

• The Proposal:It would completely eliminate theRetirement Earnings Test (RET).Currently, if you collect benefits before your Full Retirement Age (FRA) and earn over a certain threshold ($24,480 in 2026), the government temporarily withholds a portion of your benefits.

• The Pros:Working seniors would keep 100% of their Social Security checks immediately, providing greater financial flexibility and removing a major disincentive to work.

• The Cons:Claiming benefits early still permanently reduces your baseline monthly payment. Removing the test might unintentionally encourage more early claiming, reducing lifetime benefits for some retirees.

2.Comprehensive Solvency and Expansion Bills (e.g., S.770)

Driven primarily by congressional Democrats, these proposals seek to bolster the program’s funding while increasing payouts to seniors.

• The Proposal:It would shift the annual Cost-of-Living Adjustment (COLA) calculation to theCPI-E (Consumer Price Index for the Elderly), which weighs healthcare and housing expenses more heavily.To pay for this and secure the fund, the bill would subject earnings above the current taxable maximum ($184,500) to payroll taxes and increase net investment income taxes for high earners.

• The Pros:Payouts would better match the actual inflation experienced by seniors, and lower-income retirees would see a boosted minimum benefit.

• The Cons:High‑income earners and investors would face a larger tax burden on both wages and investment income.

3. The Bipartisan Social Security Commission Act of 2026

This bill focuses on creating a structured pathway toward compromise.

• The Proposal:Establish a 13‑member panel of lawmakers and outside experts tasked with drafting a single, 75‑year solvency plan that Congress must vote on without amendments.

• The Pros:This approach bypasses typical political gridlock, forcing an up‑or‑down vote on a balanced package of gradual revenue increases and benefit adjustments before the 2032 deadline.

• The Cons:A compromise package will inevitably require concessions from both sides, which could include modest retirement‑age adjustments for younger workers and incremental tax increases.

What This Means For You

While the Trustees’ report highlights the need for legislative action, it does not signal an imminent crisis. Congress has multiple viable options — and historically, it has always acted before insolvency. Our role is to help you navigate this evolving landscape with clarity and confidence.

We will continue monitoring these proposals and evaluating how potential changes may affect your long‑term strategy. As the debate progresses, we’ll keep you informed and ensure your plan remains resilient under any legislative outcome.

• Midyear Outlook:
  With geopolitics, Fed policy, and AI reshaping markets, volatility may persist. Learn what LPL Research's perspective is for the second half of 2026 inLPL's Midyear Outlook:

• New Federal Student Loan Restrictions (Effective July 1, 2026):
  Educational funding strategies will face major tightening under new federal lending regulations.For new borrowers on or after this date, the Graduate PLUS loan program has been completely eliminated, and Parent PLUS loans are capped at $20,000 annually.Additionally, stricter lifetime borrowing ceilings take effect—capping standard graduate studies at $100,000 in aggregate and establishing an absolute lifetime maximum of $257,500 across all Federal Direct Loans.Families planning for advanced degrees may need to re-evaluate their funding timelines or incorporate private lending options to cover total costs of attendance.*

^{*U.S. Department of Education, Federal Student Aid Announcements:One Big Beautiful Bill Act Updates(Implementing the Reimagining and Improving Student Education Final Rule).}

• A New Addition!
  We are so excited to share the news of a new mini addition to our CRF family! Our Managing Director of Operations, Arianna O'Rourke, welcomed a beautiful baby boy, James Theo, on June 22nd. Heartfelt congratulations to Arianna, Austin, and big sister Stella!

Make Time After Tax TIme

Taxes can be a snapshot of our money, and tax season can make most of us feel like we have a clear view of that photo. That's because filing taxes is both a look at the past and a chance to create a roadmap for the future.

• Did you end up owing more than expected, or did you overwithhold? 
• Did you generate more or less interest and dividend income than intended? 
• Did you miss any deductions or credits (and do you know why)?

Answering those questions (and knowing the rules) can help you adjust your strategy for the coming year. 

This PDFsummarizes the most recent Essential Financial Figures, which summarizes key rules, contribution limits, and tax-related information.

Keep in mind that before considering any changes, you should consult your tax, legal, or accounting professional. They will have more insights into your personal situation.

^{This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional}

The Trap of "Smishing" (SMS Phishing) and Delivery Scams

With the rise of online shopping and instant notifications, cybercriminals are increasingly moving away from your email inbox and straight to your text messages—a tactic known as"smishing."

The most common variation involves fraudulent package tracking alerts. You receive an urgent text message claiming to be from the U.S. Postal Service, FedEx, UPS, or DHL, stating that a package cannot be delivered due to an"incomplete address"or an"unpaid customs fee."The text includes a link demanding you update your details immediately to avoid the package being returned.

Because text messages feel more personal and immediate than email, many people instinctively tap the link without thinking. This directs you to a highly convincing spoofed website designed to harvest your home address, password, or credit card information.

How to Protect Yourself:

• Track at the Source:Never click a tracking link sent in an unexpected text message. If you are expecting a package, go directly to the merchant's website or copy the tracking number and paste it manually into the official carrier's website.
• Look for Generic Greetings:Legitimate delivery updates typically reference a specific tracking code or your name. Fraudulent texts often use generic phrasing like"Dear customer"or"Your package."
• Check the Phone Number:Major delivery services use official, short 5-digit or 6-digit codes (SMS short codes) to send automated text alerts. If the text comes from a standard 10-digit mobile number, it is almost certainly a scam.

What has keys but opens no locks, has space but no room, and allows you to enter but you can never go outside?

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Last Month's Riddle:A man was reading a book in his house when all of a sudden a massive power outage hit the neighborhood, plunging the entire home into complete darkness. Yet, the man continued reading his book without any disruption. How was this possible?

Answer:  The man wasreading a book written in Braille(or he was completely blind and reading by touch). Since he doesn't need light to read, the power outage didn't disrupt him at all!

Another clever (and simpler) possibility: he was reading ane-reader or tabletwith a backlit screen!