When Social Security was first signed into law by President Franklin D. Roosevelt in August 1935, it created a crucial lifeline for Americans as they navigated their golden years.
Roosevelt was passionate about the law, saying after signing it, “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
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The creation of the law changed the lives of Americans for the better, and ever since then, many have relied on Social Security as a supplement for retirement – or, in some cases, their sole income after retirement.
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This year alone, 70 million people will receive Social Security, according to a statement from Social Security Administration Commissioner Frank Bisignano.
However, in recent years, concerns about the program’s future started to bubble up. While it was designed to be sufficient to pay benefits through the year 2057, the 1983 Trustees Report pointed out a grim fact: the cost of the program would rise above the annual tax income of the program well before 2057.
Now a new report has come out with updated information about when Social Security will run out – and it’s deeply concerning.
When will Social Security run out?
The annual report from the Social Security Board of trustees was released on June 18 and reports that the trust fund Social Security leans on to pay retirement benefits could be depleted by 2033, which is the same thing it predicted last year. After that point, 77% of benefits would be payable.
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However, there is one key change in the report. The combined trust funds, which are made up of the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund, are said to have enough resources to pay out benefits until 2034. Last year, the annual report said the funds would last until 2035.
After that point, 81% of the combined benefits will be payable, per the report’s new findings.
Experts comment on the possibilities
All this can change depending on decisions made by lawmakers – and one expert believes that this news could offer a much-needed push.
“Given Social Security’s critical importance to millions of retirees and the availability of simple solutions, benefit cuts still seem unlikely,” said Jean-Luc Bourdon, CPA and founder of Lucent Wealth Planning.
“What’s missing is political will. Politicians often require a sense of crisis to tackle fiscal challenges, so the projection that the trust fund shortfall will happen a year earlier than anticipated could finally bring them closer to fixing the problem. Ironically, the worse the news is for the trust fund, the closer the solution might be.”
On Facebook, CEO of HLS Retirement Consulting Heather Schreiber also shared her thoughts on the new information, stressing that those in her field communicate the brutal truth to their clients.
“The most significant contributor to the worsening of the actuarial balance was the passage of the Social Security Fairness Act (#SSFA), which increased benefits for individuals receiving pensions based on work not covered by Social Security,” she wrote.
“In a press release today, SSA Commissioner Frank Bisignano reaffirmed the financial status of the trust funds as a top priority of the current administration. Sidebar: If lawmakers continue to kick this can down the road and cuts come to fruition, no one is immune to the haircut. So, if your clients think that claiming early to grandfather themselves into a protected class is the answer, please educate them!”