Many workers today are worried that Social Security won’t be there for them when they retire. To understand the future of the program, it helps to know how it’s funded.
The good news is that while Social Security may need to reduce benefits in the future, it’s not going away entirely.
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Right now, millions of older Americans rely on their Social Security checks to cover essential living expenses. Without that monthly income, many retirees would be in financial trouble.
If you’re in your 40s and still 20 to 25 years from retirement, you might be asking: Will Social Security still exist when I retire?
Despite rumors of the program going bankrupt, you will likely receive benefits in the future. The question is how much you’ll get.
What’s Happening with Social Security?
There’s a common fear among workers that Social Security won’t be around for them, but that’s not true.
The real issue is that Social Security is facing a financial shortfall. As more baby boomers retire and begin collecting benefits, the program is paying out more than it’s taking in. This imbalance means the system will need to rely on its trust funds for a while.
But once those trust funds are depleted, Social Security might have to reduce payments unless changes are made. While this sounds concerning, it doesn’t mean the program will vanish.
Why Social Security Won’t Disappear?
Here’s why Social Security isn’t going to completely run out of money: It’s primarily funded through payroll taxes, and those taxes will keep coming in as long as people are working.
Even with fewer workers entering the workforce in the future, the program will continue to collect funds. So while future retirees might see smaller benefits, they won’t be left with nothing.
And even those potential cuts aren’t guaranteed. Lawmakers understand how damaging it would be to let Social Security shrink without action, especially since it could lead to increased poverty among seniors. That’s why many expect Congress to step in with reforms before that happens.
Of course, it’s smart to prepare for possible changes by saving more during your working years.
Social Security is only meant to replace part of your income, not all of it, so personal savings and investments will always play a big role in retirement planning.
Bottom line: Don’t fall for the myth that Social Security is going to vanish. Believing that can create unnecessary stress and fear. Stay informed, plan, and you’ll be in a better position for the future.
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