Q & A
Will there be enough money in the Trust Fund for Social Security to pay my full benefit?
Complete Question: Right now I am 40 years old and in all honesty, I haven’t thought much about Social Security except for the chunk of money it deducts from my paycheck. But lately, it is all over the news. Granted, they are talking about the disability fund running out of money next year, but it has also brought up increasing discussions on the old-age trust fund running out of money. It finally occurred to me that the old-age trust fund will be affected in my own retirement years. I don’t want to over-react, but I don’t want to under-react, either. Should I be concerned that there won’t be enough to pay my benefit when I retire, and therefore I should start working on my savings?
Answer: Of course there is no way to predict the future of Social Security. However, I can tell you that this is not the first time there has been a threat to the solvency of the trust fund. For example, in the 1980s there was a financing shortfall. As a result, President Reagan appointed the Greenspan Commission to make recommendations for legislative changes to fix the problem. This led to many changes in the Social Security program, which were signed into law in 1983.
Today, many are concerned about the disability trust fund since it is running out of money much sooner than the old-age trust fund. Some think we should take money from the old-age trust fund to continue running the disability trust fund at full capacity. Others believe more drastic changes need to be made that will resolve solvency issues for both trust funds. Although recently-passed current legislation is dictating the latter, there are still many decisions that need to be made as to how this will be accomplished, and as of right now, it is estimated that starting in the year 2033, the old-age trust fund will only be able to pay between 72% and 77% of a person’s Social Security benefit.
So should you be worried? I cannot answer that for you. What I can tell you is that, regardless of whether or not Social Security is able to pay your full benefit when you retire, the program has never been intended to be 100% of your retirement income. Social Security is meant to supplement your own savings to help replace the income you are no longer getting because you are retired. Granted, this is not exactly how it is being used anymore – people are working and receiving Social Security at the same time; people are living off of only Social Security benefits, etc. But regardless of what is actually occurring now, the original intention in 1935 was for people to use Social Security in addition to their savings and truly “retire” from the workforce.
How you want to deal with this situation is up to you; but it is probably never a bad idea to save for retirement.