With the Social Security Administration facing a looming funding crisis over the next decade, it’s clear that the next U.S. president — either Democratic candidate Kamala Harris or Republican candidate Donald Trump — is poised to inherit a Social Security dilemma.

Almost 68 million Americans receive Social Security payments every month. The benefits support seniors in their retirement, disabled Americans and survivors of beneficiaries, but the future of the Social Security Administration has been in jeopardy for years.

More than 11,200 Americans are now turning 65 every day. As more retirees start to claim Social Security, there are not enough workers contributing to the program to make up for that increase in benefit payments.

When such a shortfall happens, Social Security turns to its trust funds — money that is set aside to help pay for benefits and other administrative costs.

But the trust fund Social Security relies on to pay retirement benefits is projected to be depleted in 2033. At that time, just 79% of benefits may be payable, according to the program’s trustees.

The average retired worker would see about a $403 cut to their current average monthly benefit of $1,920.

Most Americans rank Social Security as “one of the top” or a “very important” issue that will help determine how they vote in November, a recent CNBC poll found.

Both presidential candidates — former president Trump and Vice President Harris — have vowed to protect Social Security benefits.

But restoring the program’s solvency will require changes — benefit cuts, tax increases or a combination of both. Yet some experts say the candidates’ discussions have thus far avoided specific details on how to address that shortfall.

“We’re not seeing anyone step up and say, ‘In nine years, our main retirement program is looking at the trust of being insolvent, and that could lead to roughly a 20% benefit cut across the board of everybody,” said Jason Fichtner, chief economist at the Bipartisan Policy Center and executive director of the Alliance for Lifetime Income’s Retirement Income Institute.

“Seniors should not pay tax on Social Security,” Trump wrote on July 31 in all capital letters on social media platform Truth Social.

A recent ABC News/Ipsos poll found 85% of voters support the idea.

Currently, retirees pay federal income taxes on up to 85% of their benefits, depending on their incomes.

Just how much taxes retirees pay on benefits is based on a formula called combined income, the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.

Married couples may pay taxes on up to 50% of their benefits if their combined incomes are between $32,000 and $44,000. If their incomes are over $44,000, up to 85% of their benefits may be taxable.

Individuals may be liable for taxes on up to 50% of their benefits if their incomes are between $25,000 and $34,000. If they have more than $34,000 in income, up to 85% of their benefits are taxable.

Because those thresholds do not change from year to year, more beneficiaries are paying taxes on their benefit income over time.

Ending taxes on Social Security benefits would move the insolvency date of Social Security’s trust fund closer by over one year, according to the Committee for a Responsible Federal Budget.

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And it may not make a big difference in retirees’ budgets, according to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

The median household income for retirees is about $50,000, so the “vast majority” pay very little or nothing in taxes on their Social Security benefits, Gleckman said.

Exempting taxes on benefits would mostly help those with incomes between $63,000 and $200,000, the Urban-Brookings Tax Policy Center’s research found.

But while the top 20% of households would see an average tax cut of about $1,400 after the elimination of the taxes on Social Security benefits, Gleckman explained, they would see an average tax increase of $6,500 with Trump’s plans to impose tariffs on imports.

“The net effect of what Trump is trying to do, if you look at everything including the tariffs, is probably increased taxes on retirees, even if they do get some benefit from repealing the tax on Social Security benefits,” Gleckman said.

The Trump campaign did not respond to a request for comment by press time.

Employers and employees each pay 6.2% of wages to Social Security up to a taxable maximum (self-employed individuals pay 12.4%). In 2024, the limit on earnings that are subject to the Social Security payroll tax is $168,600. Top earners with $1 million in gross annual wage income stopped paying into the program as of March 2, according to the Center for Economic and Policy Research.

Washington Democrats have proposed reapplying those taxes for earnings over $400,000 or $250,000 in separate proposals, while also potentially raising taxes on investment income. Those tax increases would improve the program’s solvency, while also making certain benefit increases possible, per the proposals.

If Harris holds to the $400,000 threshold set by the Biden administration, her Social Security proposal would have “no impact on the vast majority of households,” according to Gleckman, since around 95% to 98% of households make that amount or less.  

“Vice President Harris and Governor Walz are fighting to lower costs and will always protect and strengthen Social Security and Medicare,” campaign spokeswoman Mia Ehrenberg said in a statement.

Exchange-traded funds are generally known for passive strategies. But there has been a surge in actively managed ETFs as investors seek lower costs and more precision, experts say.

Active ETFs represented just more than 2% of the U.S. ETF market at the beginning of 2019. But these funds have since grown more than 20% each year, rising to a market share of more than 7% in 2024, according to Morningstar.

Some 328 active ETFs have launched in 2024 through September, compared to 352 in 2023, which has been “kind of remarkable,” said Stephen Welch, a senior manager research analyst for Morningstar, referring to the growth of ETFs this year.

There are a few reasons for the active ETF growth, experts say.

In 2019, the U.S. Securities and Exchange Commission issued the “ETF rule,” which “streamlined the approval process” and made it easier for portfolio managers to create new ETFs, Welch said.

Meanwhile, investors and advisors have increasingly shifted toward lower-cost funds. Plus, there has been a trend of mutual fund providers converting funds to ETFs.

Still, only a fraction of issuers have been successful in the active ETF market. The top 10 issuers controlled 74% of assets, as of March 31, according to Morningstar. As of October, only 40% of active stock ETFs had more than $100 million in assets.

The “biggest thing” to focus on is the health of an active ETF, explained Welch, warning investors to “stay away from ones that don’t have a lot of assets.”

While passive ETFs replicate an index, such as the S&P 500, active managers aim to outperform a specific benchmark. Like passive ETFs, the active version is typically more tax-friendly that similar mutual funds.

“Active ETFs allow managers to make tactical adjustments, which may help navigate market volatility more smoothly than a passive index,” said certified financial planner Jon Ulin, managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida.

These funds can also provide “more unique strategies” compared to the traditional index space, he said.  

The average active ETF fee is 0.65%, which is 36% cheaper than the average mutual fund, according to a Morningstar report released in April. But the asset-weighted average expense ratio for passive funds was 0.11% in 2023.

However, there is the potential for underperformance, as many active managers fail to beat their benchmarks, Ulin said. Plus, some active ETFs are newer, with less performance data to review their performance.

Many investors worry about how the outcome of the presidential election will impact their investments.

But there’s another risk financial advisors are focused on — public debt, according to a new survey from Natixis Investment Managers.

Most U.S. advisors — 68% — rank public debt as the top economic risk, while 64% of advisors worldwide said the same, according to the survey of 2,700 respondents in 20 countries, including 300 in the U.S.

“No matter who wins the election, they’re convinced public debt is going to continue to go up,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.

The term public debt is used interchangeably by the U.S. Treasury with national debt and federal debt.

The government has borrowed to pay expenses over time, comparable to how an individual might use a credit card and not pay off the full balance each month. The U.S. national debt is now more than $35 trillion and growing.

The next U.S. president and Congress will inherit that government spending dilemma, as well as looming trust fund depletion dates for Social Security and Medicare.

More individuals now believe they are on their own when it comes to funding their retirements, the Natixis survey have shown, according to Goodsell.

Experts say there are certain moves individual investors can make to limit the financial exposure they have to those broader risks.

“You cannot control what Congress is doing, but you can control how you plan, how you save, invest and react to the news,” said Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. Cheng is also a member of the CNBC FA Council.

To diversify, investors may consider both U.S. and international bonds, said Barry Glassman, a certified financial planner and the founder and president of Glassman Wealth Services. Bonds that have longer duration tend to come with more risks. Glassman is also a member of the CNBC FA Council.

For investors who worry the country’s debt may lead to slow growth, it can help to add international exposure to a portfolio, Cheng said.