Will Social Security Run Out in Your Lifetime?

In early May, the Social Security Board of Trustees announced that the government trust funds had sufficient revenue to pay out full benefits until 2035. While that headline may suggest that funds will be depleted at the end of the coming decade, is that really what’s happening?¹

Social Security has actually had a pretty good year. This projection comes a year after the last estimate in 2023 and thanks to more people working, contributions continue to accumulate through employee paychecks.¹

If the Social Security trust fund were to be completely depleted, it would imply that no corrective actions were taken between now and 2035. However, it’s more likely that political pressure will prompt Washington to address the issue before it reaches that point.

Even if the funds were to run out, Social Security payments would not come to a halt. The program would continue to draw funds from paychecks and use that money to pay beneficiaries. While it is uncertain what exactly would happen to payments, the Social Security Administration has indicated that they would continue.

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

This can influence other decisions affecting Social Security payments, such as not waiting to claim full benefits. According to recent data, the most common age to start collecting benefits is 62. However, in 2022, 29% of new beneficiaries started collecting as early as possible, while 62% claimed them before the full retirement age.²

Electing to receive benefits before reaching full retirement age can result in up to a 30% reduction in benefits. On the other hand, waiting a full year past full retirement (up to age 70) can lead to an 8% annual increase in benefits.²

While not everyone can afford to wait that long, the fact that so few do might stem from a simple misunderstanding. Even so, only 16% wait until full retirement age, and just 10% wait until age 70 to maximize their benefits.²

Despite savings and investments, Social Security remains a prominent source of retirement income for many Americans. As of 2024, 88% of workers expect to rely on Social Security for retirement income, suggesting that the government program is poised to remain a crucial part of retirees’ lives for the foreseeable future. This is true for many of my clients as well, so if you have questions about the future of Social Security or the right time to start collecting benefits, please feel free to reach out.³

¹SSA.gov, May 6, 2024, “Strong Economy, Low Unemployment, and Higher Job and Wage Growth Extend Social Security Trust Funds to 2035”

²CNBC.com, May 19, 2024, “Social Security’s ‘biggest myth’ leads people to claim early, expert says. Even a slight delay can boost retirement income”

³EBRI.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”