So you may have seen frightening or even hysterical headlines in recent days about the stability of the Social Security system. Given the millions of us who currently receive Social Security, or will soon apply (or those younger adults who hope the system is still in place and available when they reach the later stages of their lives) it’s not unreasonable to be concerned about this benefit program that most of us have paid into during our working years. In fact, the Social Security Administration just released a new annual report on the financial status of the health of the Social Security Trust Funds. According to this report, given the current strength of the economy, low unemployment, and higher job and wage growth, it’s projected that all benefits and administrative costs can be fully funded under the current financing through 2035, which is a year later than last year’s projection of 2034. If Congress does nothing to change current funding methods or benefit schedules, then starting in 2035, the system will be able to pay out only 83% of benefits. Congress can (and likely will) do something to fix this situation, but for now, those are the current projections.

Should you be worried? Should you start taking your benefits early in case the system runs out of money or goes bankrupt? It’s never going to “run out of money,” a myth that doesn’t account for the ongoing funds injected into the system by current and future workers. And, it only makes sense to apply for benefits before your full retirement age (either 66 or 67, depending upon the year you were born), if your current health or financial needs demand that (as you likely know, applying for benefits before your full retirement age means you get less money per month than you would have had you waited, and over the long term, you are cheating yourself out of tens of thousands of dollars). 

There are legitimate concerns about the stability of the system, given that demographic changes mean that as the population ages, more people are collecting Social Security and fewer workers are contributing, and within the next decade unless Congress either increases taxes, raises the retirement age, reduces benefits, or some combination of those, the system will not be able to maintain its current allotment of benefits. But for the immediate future, and several years going forward, no one is in jeopardy of losing or reducing their Social Security benefits. 

However, there are still reasons to be anxious regarding your Social Security payments. Never intended to be the only or primary source of income for older adults (it’s intended to cover about 40% of your working income), it’s estimated that 1 in 7 current seniors now rely on Social Security for nearly all of their income once they stop working. For many, the shortfall between their Social Security payments and their cost of living expenses means that additional sources of revenue need to be found, including the need to return to work in some capacity. Kiplinger recently reported on a survey that found that almost 40% of older adults plan to go back to work in 2024 because the COLA (Cost of Living Adjustment) of their monthly payment was lower than expected, meaning they can’t keep up with current expenses and prices. The Wall Street Journal recently profiled several seniors who do make a go of it, living just on their Social Security payments, without any real savings or investments. Whether trimming their budgets as much as possible, downsizing their housing, or receiving gifts from kindly relatives, these seniors manage to scrape by and even enjoy their lives, but it’s not always easy. 

If you haven’t yet entered the Social Security system, click here to find out how to set up an online account and arrange for your payments to begin. Once you’re in the online system, there are many arrangements you can take care of, such as setting up direct deposit, changing your address, or receiving a new Social Security card, with just a few clicks of your keyboard. To find out more, jot down your Social Security number and look here.