Broker Check

Is Social Security Going to Run Out in Your Lifetime?

June 07, 2024

We get regular updates on the Social Security trust fund. In early May, the Social Security Board of Trustees announced that the trust funds had revenue to pay full benefits until 2035. Generally speaking, the headline's tone is very grim and indicates that the fund will be totally depleted in a matter of years, but this isn’t what’s really happening.1

Social Security has had a pretty good year. This projection is a year later than the one offered in 2023 and can be chalked up to more people working and, as a result, more people making the Social Security contributions you see in every paycheck.1

If the Social Security trust fund coffers were to disappear completely, it would imply that no action would be taken to correct the matter between now and 2035. It seems more likely that political pressure would be placed on Washington to fix the problem before it got to that point.

If the trust fund were to run out, it doesn’t mean that Social Security payments would come to a screeching halt. The program would still be taking money out of paychecks and using that money to pay those collecting payments. It's uncertain what might happen to payments, but Social Security has suggested they will continue.

The dour headlines may contribute to several persistent myths about the venerable program. A 2023 survey by the Nationwide Retirement Institute discovered that three out of four adults aged 50 and older believe that Social Security will run out in their lifetime.2

This belief may contribute to other decisions they make that affect their Social Security payments, namely that they don’t wait until they can claim all of their benefits. According to the most recent numbers, the most popular age to begin collecting benefits is 62; in 2022, 29 percent of new beneficiaries started collecting as early as possible, while 62 percent claimed before the full retirement age.2

Not waiting to full retirement age can cause up to a 30 percent cut in benefits. Also, waiting a full year past full retirement, up to age 70, can lead to an 8 percent increase in benefits. That’s per year.2

While not everyone can wait that long to start taking benefits, sometimes for very good reasons, the fact that so few do so could be due to a misunderstanding. Even so, only 16 percent wait to full retirement age, and only 10 percent wait until age 70 and take advantage of those larger benefits.2

Despite all our savings and investing, Social Security still provides many Americans the lion’s share of retirement income. A majority of workers (88 percent) anticipate relying on Social Security for retirement income, and that’s true for a number of my clients. Social Security should remain important to retirees' lives for the foreseeable future.3

The views and information contained herein have been prepared independently of the presenting Representative/Agent, are presented for informational purposes only, and should not be construed as investment advice.

1. SSA.gov, May 6, 2024, “Strong Economy, Low Unemployment, and Higher Job and Wage Growth Extend Social Security Trust Funds to 2035”
2. CNBC.com, May 19, 2024, “Social Security’s ‘biggest myth’ leads people to claim early, expert says. Even a slight delay can boost retirement income”
3. EBRI.org, April 25, 2024, “Results From the 2024 Retirement Confidence Survey Find Workers’ and Retirees’ Confidence Has Not Recovered From the Significant Drop Seen in 2023, but Majorities Remain Optimistic About Retirement Prospects”