Economy

Social Security Could Run Out of Money

Almost 70 million Americans receive payments from programs operated by the Social Security Administration. For years, there have been worries that the fund would run out of money. Those fears were heightened recently by comments from the trustees of the Social Security and Medicare trust funds, who reported that the Old-Age and Survivors Insurance (OASI) Trust Fund “will be able to pay scheduled benefits on a timely basis until 2034.” For Americans in their eighties and nineties, this may not be bad news. For younger Americans, it clearly is.

There are no ready solutions to the problem. The AARP recently asked, “How Long Will Social Security Be Around?”

The effect of the problem is that people who retire after 2034 may not have access to the sums to which they are currently entitled. For many, this will come after they have paid tens of thousands of dollars into the fund over the course of their work lives.

The effects on the economy in the 2030s and beyond could be devastating. Consumer spending is about three-quarters of gross domestic product. This likely will not change much a decade from now. For some older Americans, income may drop to what they can afford for housing and transportation, if that. Discretionary income for millions of these retirees could be little to nothing.


It is rare that economists speculate about the economy beyond a few years into the future. However, a number have concentrated on the effects of an aging population. The baby boomers began to hit retirement age a few years ago. Low birth rates in the United States mean that the number of people who pay into Social Security funds has dwindled and will continue to do so.


Suggested solutions to the Social Security problem will be universally unpopular. One is to increase the Social Security contributions of people who are employed now, which will cut their incomes. Another is that people cannot start to draw on the fund until they are older than the current 62 years of age. The final, and most devastating, is that Social Security payments will be cut below current levels. To make matters more difficult, politicians do not want to advocate any of these unpopular solutions.

What is certain is that there is no solution to the Social Security problem today, and there will not be one soon.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.