Will Social Security Run Out By 2034?
TWO MAJOR REASONS WHY YOU DO NOT HAVE TO WORRY ABOUT SOCIAL SECURITY RUNNING OUT
If you are worried about Social Security running out soon, you are not alone. 71% of adults in America have reported having fears that Social Security will run out during their lifetimes. These fears are not without reason, the most recent Social Security Administration (SSA) report stated that the trust funds the program relies on could be depleted by 2034. Despite this jarring prediction of depleted funds, there are a few good reasons to not worry about Social Security running out anytime soon.
Congressional Solutions
The 2021 SSA report is based on current trends and does not factor in what would happen to the program in the scenario that lawmakers resolve the issues with funding. Social Security has existed for over 80 years, the program itself receives more support than almost any other government program. It is more than likely that Congress will find a solution for Social Security by 2034 in order to avoid making benefit cuts.
One way that Congress could resolve the issue would be to raise taxes. The SSA relies heavily on taxes, if there is more money coming in from taxes, there will be more money to pay out. A second option is for lawmakers to increase, or remove, the wage cap. Currently the wage cap, or the taxable maximum, is $142,800. By increasing or eliminating this cap those who earn more than $142,800 annually would be subjected to higher taxes. In turn, this would bring more money into the SSA and allow for more benefits to be paid out.
For any of these options to become reality, lawmakers must come to an agreement on what the best solution would be. Contrary to what many believe, if no solution is found by 2034, the SSA would not become completely bankrupt. In the event that the SSA trust funds are depleted by 2034, benefits would be cut about 22%. While this cut in benefits is not ideal, you would still be receiving money from the government each month once you retire.
Planning Ahead
While there is likely to be a solution by 2034, Americans are troubled by the fact that they cannot be certain they will receive their full Social Security benefits in the future. This unpredictability can also make it hard for many to confidently plan their retirement. Fortunately, there are certain precautions you can take now to increase your own future benefits, even if the Social Security trust funds are drained by 2034.
One way to potentially increase your benefits is to wait to file for Social Security until you have worked for at least 35 years. The SSA calculates your benefits by averaging the wages of 35 of your highest earning years, the longer you wait to file, the higher your benefits will be. Delaying your retirement is the second way to increase your monthly benefits. The earliest you can claim your Social Security benefits is age 62. However, if you can wait until age 70 to file for retirement you can receive up to 30% extra on top of your already calculated benefits.
Staying up to date and informed about Social Security is the best way to make smart choices and avoid unnecessary stress. For more information about Social Security check out our other blog posts with tags related to SSDI.
