Money·3 min read

What a Struggling Social Security Program Means for Your Finances

Social Security Card
Design: theSkimm | Photo: iStock
September 1, 2021

For decades, retirees have been cashing monthly Social Security checks. But as birth rates and immigration decrease, there are more people collecting those benefits than paying into them.

The deets that affect your wallet: The gov now predicts the Social Security trust fund will run out of money by 2034 – one year earlier than previously expected. Experts say COVID-19’s economic side effects (think: a recession that negatively impacted payroll taxes, thanks in part to fewer people in the labor market to pay them) have contributed to the fund drying up faster. That's despite an uptick in deaths among retirement-age Americans in 2020.

This doesn't mean Social Security benefits will disappear completely. But the money you get in retirement could be less than you might've planned on.

What you can do about it: Be proactive.

  • Invest more for retirement. A depleted Social Security fund could mean retirees see about a 20% cut in benefits. Translation: it's on you to invest more of your own money to make up the difference. Bingo nights don’t pay for themselves. Sign up for your company's 401(k) and contribute at least enough to get any match offered. (Hi, free money.) Or try to max out an IRA. Then hands off that cash until retirement.

  • Prep for potential increased taxes. Your tax dollars already pay for Social Security. You and your employer kick in about 6% of your income, up to a max of around $130,000. (If you work for yourself, you pay more. Sorry.) One way lawmakers could help cover the Social Security shortfall is to increase those taxes – for everyone or just higher earners. So be sure you’re taking advantage of all the tax deductions and credits available to you. And consider hiring a tax pro if you need help.

Related: How Much Do I Need to Retire?


The Social Security trust fund is running out of money. That doesn't mean the gov will stop sending out checks to retirees. But they could be smaller. Aka it's on you to build the financial future you want.

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