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Will Social Security Run Out of Money?

You have probably heard about the possibility of Social Security running out of life for most of your adult life. This is always a concern because we all want to be able to receive benefits for something we paid into for our entire working life. So, will the funds truly run out or is that just an irrational fear?

According to the government’s own website, Social Security is schedule to be able to make full payments until at least 2037. At that point, payments would need to be reduced to 76%. The situation would need to be addressed by lawmakers between now and that year in order to fix this problem. One solution proposed by the Social Security Board of Trustees is to reduce payments by 13% immediately. This would allow Social Security to continue to pay out what would then be “full benefits” for the next 75 years.

There is no doubt that people do not want to give up 13% of the benefits that they are entitled to. In fact, whenever the subject comes up in Congress it is always treated with kid gloves. They understand that they don’t want to be the one holding the bag when the decision needs to be made so they kick the can down the block, so to speak.

Many adults now are warning their kids and grandkids to start preparing for retirement now and do not count of government payments. Half of the people from Gen Z surveyed don’t believe they will ever see payments from Social Security.

In a recent interview, Alicia H. Munnell, Director of the Center of Retirement Research at Boston College said the following: “No major Social Security legislation has been passed at all since the early 1980s. And so we do have this event coming up that forces Congress either to do something, or most people’s benefits are going to be cut by [nearly] 25%.”

Where Does the Social Security Fund Get Its Money?

Social Security taxes payroll to the tune of 12%. This means that your employer pays 6% and you pay the other 6%. Self-employed folks pay the entire 12% themselves. For every dollar that is taken out, 85% goes directly into the fund. The other 15% is used for administrative purposes as well as payments to people with disabilities which prevent them from earning a substantial living.

What Can You Do?

If you are concerned about the future of this program you can reach out to your representatives directly. There is a website where you can find your representative and their contact information. If enough people press them they will take action. Their job is to respond to what the people in their district want them to.