Is Social Security Going Broke? Here’s What You Need to Know

We receive questions about Social Security almost every day, and one of the most common concerns is, "Is Social Security going to be around?" In other words, people are asking whether Social Security is going broke. While there are some mathematical realities about the Social Security Trust Fund that aren't particularly encouraging, it's essential to understand the full picture.

Over the next several years, we're approaching a period where more money will be going out of the trust fund than coming in. At this point, it's uncertain what long-term adjustments will be made, but there are two likely scenarios: either an increase in Social Security taxes (more money going into the fund) or a reduction in the amount of future promised benefits.

For those close to retirement or already receiving benefits, the good news is that we don't foresee a negative impact on their Social Security income throughout their retirement. The trust fund should remain available for them. However, for younger individuals or those far from retirement, it’s possible they may face higher taxes and receive a smaller payout from Social Security when their time comes.

So, is Social Security going broke? Broadly speaking, no—not for those currently receiving benefits or who will be eligible in the near term. However, to sustain the program for future generations, there will need to be a balance of higher contributions and reduced distributions.

This is a critical financial planning issue, especially since over half the population relies on Social Security for the majority of their retirement income. In fact, for more than 80% of retirees, Social Security makes up a significant portion of their income. For the system to continue supporting future retirees, changes will need to be made.

It's important to remember that Social Security is just one income source in retirement. Now is a good time to evaluate your financial plan and consider other income sources, such as retirement savings, part-time work, or even a pension if you're one of the lucky few who still have access to one.

In conclusion, working with a financial planner can help you set and achieve your retirement goals, ensuring you're set up for future success and a comfortable retirement.

If you have questions about your retirement, call us at (704) 987-1425 or visit us virtually at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.

These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Osaic Wealth.