Is Social Security Going To Run Out? These Scenarios Are Concerning

This question buzzing around Social Security has been in play for many years. People constantly worry that Social Security benefits will dry up, and they aren't exactly wrong to suspect that drastic changes may ultimately be afoot. Not to fall down a rabbit hole here, but the federal government has, for many decades, promised to protect specifically named programs and spending priorities only to reverse course later down the line. It's a consistent theme that's become as ingrained in American politics as any other.

As a result, it's no wonder why, according to the National Retirement Institute, 75% of American adults over 50 years of age worry that the Social Security program they've been paying into all their lives will become insolvent during their lifetime. It's one of many truly alarming retirement statistics that everyone should take notice of. Fortunately, there's little truth to the idea that Social Security benefits will cease to exist.

Even with this disclosure out of the way, however, the program isn't on particularly strong footing, and plenty of concerns remain with regard to its ultimate future. Social Security benefits are meant to help older Americans survive after they leave the workforce. With a maximum monthly benefit of $3,822 in 2024 ($4,873 for those who delay taking checks until age 70), the program isn't going to create newly rich individuals, but it does lift an estimated 22 million Americans out of poverty.

The Social Security program is built upon a tax relationship between current and former workers. People in the workforce today pay a portion of their income tax toward funding the Social Security program (6.2% themselves, combined with another 6.2% from their employer for a total or 12.4%). You don't pay into a sort of pension fund with this collected tax levy; instead, your contribution goes into the total pool of resources and is used to finance the current slate of Social Security benefits being paid out.

Once you retire, you will start drawing benefits, and people that are working at that time will fund this portion of your retirement income. That's how the cycle works. But the program is in jeopardy. The truth about the future of Social Security benefits is much clearer thanks to the SSA's Board of Trustees report from 2024. Key takeaways provide a stark window into the future of the program.

Firstly, costs have exceeded the fund's non-interest income since 2010, while the cost to run the program ballooned past total income in 2021. Meanwhile, it's projected to exceed that ceiling again in 2024 and remain higher over the next 75 years through 2098. The result is a potential to see benefits cut by nearly 20% as soon as 2035, when the fund runs out of excess capital.

Federal action could resolve this looming cliff, and people contributing to Social Security's future today will likely demand action from their elected officials. Even so, there are no true guarantees in this world, and it's possible that reduced Social Security benefits for all beneficiaries — not just early drawers — could become the new norm. To be clear, this news doesn't mean Social Security benefits will disappear, just that additional taxes on benefits could be levied, or the benefits themselves could become smaller. This is (partially) good news for those who plan to rely heavily on Social Security, but comes with a healthy dose of distress, nonetheless.

Knowing this, a few changes should become a part of everyone's retirement planning to account for this potential downsizing of financial support. For example, Dave Ramsey suggests drawing Social Security early to invest that monthly cash in personal retirement accounts. It's also worth considering a delay to your retirement. While checks might be forecast to become smaller, waiting to take them can still boost their dollar amount. Finally, investing in your own retirement is always a must (as is starting to save for retirement as early as possible). Utilizing things like 401(k) match programs will also help bring increased life to your savings portfolio to ensure you don't just survive in retirement, but have the opportunity to thrive.