Greetings!,

True or false: Social Security will go broke and payments to recipients will stop when the system goes bankrupt around 2032?

The answer to this question is: no, not exactly.

It seems what the media and gossip have portrayed is that once the Social Security System runs out of money, the whole program will stop. This is also the general perception of findings published by UCLA and Cornell University in the April issue of the Journal of Financial Planning.

It is true, the Social Security System is in a difficult period. Around 2032, it is expected that more funds will go out to beneficiaries than what will come in from tax payments. But that does not mean the program will cease. (Do you really think that if the system ran out of money the government would stop collecting your payroll taxes?)

The reality is that Social Security is a pay-as-you-go program. Benefits paid out today mostly come from current payroll taxes on current workers. In addition, money paid out is not money you earned, but rather an entitlement based on the time you worked and payments you made into the system.

The reality is that you are NOT collecting your money, but rather funds deposited by other workers. In addition, these taxes go into a pair of trust funds; one for disability and another for supplemental income (retirement). So what we hear and read about Social Security going broke really addresses the shortfall of the reserve funds that have been set aside.

A Bankrate survey in 2025 found that 77% percent of Americans feel they won't receive Social Security upon retirement. Similarly, a Transamerica survey at the same time found that 71% of those not yet retired feel Social Security will not even exist for them.

My opinion is that when this shortfall is reached, benefits will be reduced across the board or means tested (taxed) based on overall income.

Increasing the percentage of payroll taxes alone may not solve this problem. Also, increasing the level of income that is taxed could help, but also have a corresponding increase of benefits to the higher wage earners.

The solution(s) to this problem are complicated, and while Social Security will not stop, without changes benefits will be impacted.

To look at one of what may be many possible solutions, the Brookings Institute put together a bipartisan proposal. If you would like to read their solution click on the link below:



Fixing Social Security

Doing nothing is not a solution. As I get closer and closer to the time I will collect Social Security, I am eagerly looking forward to some politician(s) having the courage to address this prioblem.

As always, thanks for reading.



Bernie & Chad