future of social security

Social Security is one of the most crucial retirement benefit plans of our nation. However, many people are wary about its future; they are not sure about what role it will play in their retirement planning.

To get a clear picture, you need to understand some of the important facts about it.

Here you go:

The history of Social Security benefit

In the year 1935, Social Security was formulated. It was created to offer income benefit for retired workers aged 65 or older. With the help of the Social Security benefit, our nation experienced outstanding medical advances and a healthier lifestyle.

Till date, nearly about 167 million workers pay Social Security taxes, and nearly 60 million Americans receive Social Security benefits including retired workers, disabled Americans, survivors of deceased workers, and dependents of beneficiaries.

According to the Social Security Administration reports, "61% of retired Americans rely on Social Security benefits for at least half of their income. 72% of retirees (aged 80 years or older) rely on Social Security for more than half of their income".

How does Social Security serve the benefit to the Americans?

In our nation, workers pay Social Security taxes on their income. It is an automatic deduction from the worker's income. The more they earn, the more they have to pay taxes.

In 2017, the tax rate of Social Security is 12.4%. A self-employed person needs to pay the entire tax but if you work for your employer, then you and your employer split the tax amount.

Do you think that the tax you pay goes straight to your personal Social Security savings account?

The tax you are paying isn't getting saved in your personal Social Security savings account. The Social Security Administration takes the money and uses it to pay the current beneficiaries.

You can think about it this way.

About 85% of every Social Security tax dollar you pay goes to pay the current retirees, surviving spouses, and dependents of deceased workers. The remaining 15% goes to a trust fund that pays disability benefits for the qualified Americans.

The future of Social Security benefit

The problem is that the number of beneficiaries is growing more than the workforce, whose contribution is the sources of its fund.

Social Security was never meant to be the only source of income in retirement. It was planned as a supplement.

Maybe you have heard that the future of Social Security is uncertain.

Let’s find the answer to this question- Will the Social security be there when you retire?

See, until 2034, it will provide the full benefit.

After that, nearly 79% of the retirees may get the scheduled benefits, which means without reform, many Americans may not be eligible to get the full benefit.

Because, in 2034, the number of retirees (aged 65 and above) will increase from 48 million to79 million. Thus, it will create a pressure on the system.

For this reason, many experts are predicting that the Social Security benefit may not be available over the next few decades. However, as per some experts, though the Social Security's funding ability is under pressure, yet it will not disappear fully.

A certain percentage of retirees in America will get the benefit.

According to Kurt Czarnowski of Czarnowski Consulting, who served as a regional communications director for the Social Security Administration for nearly 20 years, "Unless there's a total collapse of the U.S. economy, there will always be employee contributions flowing into the Social Security system".

Thus, after the year of 2034, the Social Security benefits will still be available for a certain percentage of retirees in the America.

When to claim your Social Security benefits

According to the Social Security Administration, to get Social Security benefit, you have to claim at the full retirement age, which is now 66 years.

66 for people born between 1943 and 1954. It will gradually creep up to 67. If you claim at the age of 62, your benefit will be sliced by 25%.

You can claim retirement benefits as early as 62, or as late as age 70.

However, claiming retirement benefit before the full retirement age will reduce the monthly amount you will get.

How does the Social Security fit into your retirement plan?

The simple answer is, if you are 55 or above, you are eligible to get the full benefit you are supposed to.

As per the recent discussions about reforming, Social Security may impact the benefits of younger people.

Younger people may encounter a 23% reduction in their payout after the year 2035.


It is quite natural that political parties will try to make changes in the system of Social Security, but as of now, it is impossible to remark the exact changes about the future of Social Security benefit. We can just predict about its future.

Experts suggest that it is expected that Social Security will not be able to offer enough to live on during the retirement. Thus, people aged 55 or below who want to secure their financial future, shouldn't consider the Social Security benefit as the ultimate source of income in their retirement.

It is advisable not to fully rely on the Social Security benefit.

Younger people should give priority to the retirement saving account and other investment to secure their nest egg.

As per the financial experts, people will need 80% or more of their pre-retirement annual earnings to balance their lifestyle in the retirement.

However, the calculation is not simple. There will be many changes in the future.

The inflation, cost-of-living adjustments, and market volatility can impact your retirement drastically.

So, the ideal retirement savings for a secured retired can be a tough calculation.

Thus, it is advisable to seek financial advice to get a custom plan for your retirement.

Lastly, you have to understand that Social Security is now becoming unpredictable year after year.

Therefore, to secure your financial future, you have to increase your income so that you can increase your retirement savings. Your financial future is your responsibility.

So, it is imperative to invest a portion of income in stock and mutual funds through the company’s 401(k) plan or a Roth IRA. Most of the employers offer a preselected list of investment choices. However, you can invest in mutual funds, exchange-traded funds (ETFs), stock and bonds, as you want to.

It is also advisable to consider a financial advisor’s help to create a plan and a proper strategy for a financially better retirement days.

  • expertise badge
  • TrustLink logoTrustLink logo
  • Customer ratings on BBB
  • IAPDA logo
  • Calchamber Member
  • Calbar Registered
  • D&B
  • Trustpilot
  • yelp logo