Will Social Security Go Bankrupt?

About 40% of people eligible for Social Security rely exclusively on Social Security for retirement income according to research from the National Institute on Retirement Security in 2020. Doesn’t sound good for a program that may be bankrupt in the next several years…

Per an annual report released by the Social Security Administration (SSA) in 2021, the Social Security program will go bankrupt in 2034. Given the COVID pandemic, we could easily draw the conclusion that the program would now become bankrupt before 2034.

But, here is the official word from SSA, as released on June 2, 2022. The Social Security Board of Trustees estimates that the projected depletion is now in 2035! Okay, so not a big improvement. At that time, you can expect to receive 77% of benefits payable to you.

Should you be concerned about the Social Security program disappearing? Given the reliance of so many people on Social Security benefits, no. For the sake of economic stability, lawmakers cannot afford for the Social Security program to disappear. Are you breathing a sigh of relief? Think about it, the current poverty rate of 9% would increase to almost 50% if the Social Security program disappears...

That doesn’t mean there won’t be changes to the Social Security program which will impact how much you receive from Social Security when you claim your benefits.

So, you can count on receiving Social Security benefits in retirement. But how much, who knows? The Trustees recommended, in the report released on June 2, 2022, that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually. They made some pretty big changes in 1983, including taxing up to 85% of the Social Security benefits you receive based on your annual income. Let’s hope for some gradual changes this time so you can plan accordingly.

There is one guarantee when it comes to the Social Security program – there will be upcoming changes. The uncertainty lies in how those changes will impact you.

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