The Future of Social Security

Nov 9, 2021 | All Posts, Blog | 0 comments

Is the future of Social Security secure? According to the Social Security Board of Trustees, the current benefits program will be kept up until 2035. At this time, changes will have to be made if the full benefits are to be maintained. These changes will most likely include either a reduction of benefits of around 13% or a 2% payroll tax increase. Without a change, continuing taxes will be able to pay about 79% of the scheduled benefits.

The Social Security program currently provides benefits to over 65 million people. An estimated 180 million workers and their employers finance the program.

How exactly does Social Security work?

Let’s back up a little, though. How does the program work, exactly?

The program was created in 1935. It’s purpose is providing income to retired workers (age 65 or older). Others who receive Social Security benefits include disabled Americans, dependents of beneficiaries, and survivors of deceased workers.

Currently, the Social Security tax rate is 12.4%. If you’re self-employed, you pay this entire amount out of your paycheck. If you work for someone else, you pay half (6.2%) and your employer pays half.

This 12.4% doesn’t go directly into your personal Social Security savings account, though. The money you are currently paying into Social Security is being pooled to provide for current beneficiaries. In other words, those who are earning now are paying for those who are already receiving the benefits.

Now, let’s get back to the future of Social Security.

I don’t plan to receive Social Security until 2035 or later. Should I be worried?

We wouldn’t advise worrying about this! You can certainly find plenty of people who are concerned about the trust fund running out. If you’ve been paying into the program for many years, this might be especially unsettling to you. Take a deep breath!

Government issues often get dealt with when they become a crisis. We are still over a decade away from the projected exhaustion of the trust fund preserves. Therefore, we expect that solutions will be implemented as we get closer to this date. There might be some disruption in benefit payments around that time period, and there will almost certainly be some finger pointing. However, if the past is any indicator, a solution will be found.

Remember, don’t depend fully on Social Security.

If you know us, you probably know that we don’t advise depending on Social Security to solely fund your retirement. It’s a nice extra — icing on the cake. However, your investments are what are really going to provide for your needs throughout your retirement years. If you’re counting on Social Security to take care of you, you’re going to be really scraping by. Social Security was never designed to be a sole source of income in retirement, but rather a supplement. Therefore, even if the benefits are slightly lower when you retire than they are now, it shouldn’t make a drastic difference in your retirement plans.

Want to know more about when you should begin drawing from Social Security? We wrote about some factors to consider here

Take a deep breath and focus on your retirement plan.

Your retirement plan is ultimately in your hands. Social Security may or may not change by the time you reach retirement. Regardless, you can start planning now for a retirement future that will meet your personal retirement needs.

At Milestone Wealth Management, we help you prepare for retirement by making sure that you have the proper plan in place. We want you to be able to smoothly transition from your earning to spending years. Ready to create a custom plan that fits your needs? Call us today.


This material is not intended to replace the advice of a qualified tax advisor, attorney, or accountant. Consultation with the appropriate professional should be done before any financial commitments regarding the issues related to the situations above are made.

Download our 15 Detailed Steps to Financial Success

One of the most difficult parts about planning for the future is the unknown. Because of this, we’ve created a free financial checklist that allows you to take note of which areas of your financial life are all set and which ones need attention.

Thank you for downloading "15 Detailed Steps to Financial Success." Your download link has been sent to your email. Please make sure to check your spam or junk folder if you do not see the email in your inbox within the next few minutes.