Social Security: Will It Be There for You?
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Social Security: Will It Be There for You?
Most Americans don’t start saving for retirement as early as they need to. This leaves many people dependent on Social Security for their retirement funds. But will Social Security funds be there when you retire?
Things To Know
- Social Security will begin running into cash problems soon.
- By the mid-2030s, Social Security will likely be covering less than 100% of benefits.
Social Security’s coming problems
Nearly 55 million Americans currently receive Social Security benefits, which are paid for through payroll taxes and interest from special bonds that the tax money is put into. Social Security began running into problems in 2010, when taxes alone were no longer enough to cover Social Security benefits paid out. Interest from the bonds invested in by Social Security trust funds has enabled the funds to pay out benefits since then. Beginning in 2021, the trust funds began to redeem asset reserves in order to help pay out benefits, thus reducing the size of those reserves over time.
The Social Security Board of Trustees predicts that by 2033, Social Security will be able to cover only about 77 percent of all benefits; these benefits will be covered by the payroll taxes that the Social Security Administration continues to collect from workers’ paychecks; the reserves in the trust funds will be gone. If you are retiring within the next ten years, your benefits will probably be fully covered.
How to remedy these problems?
Many factors will decide whether these predictions come true. More people in the workforce and a stronger economy could lessen the problem. Possible solutions to the Social Security problem include privatizing Social Security, raising payroll taxes, increasing the wage base, increasing the retirement age, changing the 35-year earnings average to 38 years, and allowing Social Security trust funds to be invested in the stock market.
A summary of the Social Security trustee report can be found here.
