Is Social Security Going Bankrupt? (The Honest Answer)

Tens of millions of Americans rely on Social Security checks for a substantial portion of their retirement income.

Yet the outlook for this program is uncertain, due to shifting U.S. demographics. Is it true that Social Security is running out of cash? And what happens if it does?

⏰ *IN THIS EPISODE* ⏰
00:00 Social Security 101
01:55 Historical & Projected Financials
03:17 What Went Wrong?
05:47 Options To Fix Social Security
07:58 Most Likely Solution
08:18 Key Takeaways

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[frankt]

I’m curious as to why we wait until there are dire predictions to fix things like this. I remember discussing social security in a graduate economics course right after the last fix in 1986. It would have been far easier to repair these identified issues then but, politicians were involved. Easy fix 40 years ago, not so much now. Simply increase tax rate by 0.1% per year for the next 10 years and increase the FRA by 1 month per year beginning in 2035.

[rajbeekie]

Fixing SS is pretty simple mathematically.
We are living way longer than we were in 1930.
Raised the age of eligibility from 62 to around 65.
Reexamine the # of people qualifying for disability.
Raise the cap on income to $200, 000
Do the above and SS will be flush with cash.
Note: SS was never meant to be your sole source of retirement. It was intended to be a supplement.

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[asajayunknown]

An important point you never articulated is that SS does not function like a personal savings account. Your "account" with SS has no backing funds specific to your SSN. As he explains, it's money in and money out. So, all of those who would say "give me my money", there simply isn't any to give you. Sorry.

[JPOlmin]

Thanks for the content. Are life expectancy and kids per family holding steady now or are the patterns you described projected to continue? If they hold steady, could we think of the incoming changes as "temporary" (active for many years but eventually stopped)?

[neverclevernorwitty]

You missed the most likely (in my opinion) option, social security tax is capped to $160k taxable earnings. If this was raised to $250k this would kick the can down the road to 2045, which is something politicians love to do.