How real is the threat to Social Security benefits?
Without question, the threat is real. But insolvency does not equate to what many Americans think is the complete stoppage of benefits. This misunderstanding was highlighted in a recent UCLA/Cornell University paper published in the Journal of Experimental Psychology. The paper notes that, “Nearly two-thirds of us believe that when the much-feared Social Security shortfall arrives, around 2032, benefit payments will cease.” Keyword here: cease. The literal use of the word “cease” means to stop, halt, or bring an action to an end. Hence, a growing sense of dread that, as early as 2032, all cash flow to retirees and dependents would disappear.
As we’ve reported numerous times on this website, the assumption of no more benefit payments is simply not true, although we hasten to note further that there would be a reduction in payments commensurate with the pay-as-you-go program’s incoming revenue. This, of course, would be the case absent any correction by Congress. An article posted yesterday on fa-mag.com by Daniel De Vise provides background on this issue. Also, for additional background on the overall Social Security insolvency matter, click here to review a synopsis of the issue and a pathway to addressing the problem.