Millions of seniors depend heavily on Social Security to pay the bills, but a large chunk of today’s workers worry that those benefits won’t be there for them by the time they’re set to retire.
They’re not totally wrong. Though Social Security is not in danger of going away completely, the program may have to implement severe benefit cuts to address a very real financial shortcoming it could face in under a decade-and-a-half.
Specifically, Social Security anticipates a revenue shortfall in the coming years as baby boomers stage a mass exodus from the workforce and not enough replacement workers come in. Since the program’s main revenue source is payroll taxes, a shortage of workers could strain Social Security, forcing it to dip into its trust funds to keep up with scheduled benefits. But once those trust funds run out, Social Security may have to slash benefits.
In April, the Social Security Trustees reported that the program’s trust funds would be out of money by 2035, but that was before the COVID-19 pandemic took hold. Since March, unemployment has been rampant, which means Social Security’s main revenue source — payroll taxes — has taken a major hit in the past four months. The result? Those trust funds may be depleted much sooner, resulting in benefit cuts prior to 2035.
Clearly, that’s not the best news, and it’s certainly something to worry about — unless, of course, you take retirement savings matters into your own hands.
