Each year, the Social Security trustees evaluate the financial status of the Social Security trust funds, and the most recent report included some bad news. The trust funds could be insolvent by 2034, one year earlier than previously expected.

The accelerated timeline comes on the heels of a historic cost-of-living adjustment (COLA). To keep benefits in line with inflation, Social Security recipients got an 8.7% COLA this year, their largest raise since the early 1980s. But the trustees had used assumptions last year that include a COLA between 3.9% and 5.1%.

To be clear, Social Security is not on the brink of bankruptcy, and the odds of the program disappearing are virtually nonexistent. Social Security is funded in large part by payroll taxes, and that income stream will continue even if the trust fund becomes insolvent. Unfortunately, payroll taxes alone would cover just 80% of scheduled benefits in 2034, meaning extensive benefit cuts would be necessary in the absence of legislative action.

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Source Fool.com