A reader asks:
I saw the report this week that said Social Security will be insolvent by 2035. As a card carrying millennial (I’m 35) I’m operating under the assumption that Social Security won’t be there for me when I retire. Is that a fair assumption considering the trillions of dollars we’ve added in government debt since the pandemic?
I saw all of the headlines too:
It sounds dire.
I know a lot of young people who feel the same way. There is too much government debt. Politicians won’t do anything to fix the entitlement shortfalls. The boomers are going to leave the cupboards bare.
Insolvency sounds scary but the situation is not quite as grim as the headlines would have you believe. I went through the actual report. Here’s what I found:
If Congress does not act by 2035, the trust fund reserves are projected to be depleted. However, the income from Social Security taxes would cover 83% of scheduled benefits.
While it is true that more money will be going out than coming in, the shortfall is only 17 cents on the dollar. So it’s not like there will be no coverage at all.
Now look at the chart they produced that takes things out even further:
By the year 2098, when I will be turning 117, they project the tax revenue will cover 73% of the benefits. That’s a long runway to shore things up.
There are three potential scenarios when thinking about these numbers:
(1) People should get used to the idea of their Social Security benefits getting slashed starting in the 2030s.
(2) Politicians still have time to act but taxes might be going up to avoid any shortfall.
(3) The U.S. government likes to spend money, we print our own currency and