What is the future of Social Security?

Consumer Warning – Watch for Social Security Phone Scam

In 2035, the Social Security Administration’s reserves are expected to run dry if Congress doesn’t act.

This does not mean that the program will dissolve completely, but rather that older adults would get reduced benefits. So, why is the future of Social Security so uncertain?

For one, Americans have higher life expectancies yet fewer children than previous generations, according to data from the World Bank. The baby boomer generation is retiring in record numbers, altering the proportion of workers to retirees. That means there will be fewer workers contributing to Social Security for a greater number of retirees.

According to the Congressional Budget Office, the Social Security Administration could run out of funds as early as 2033. This means 10 years are left for the government to propose legislation to extend the life of Social Security.

“Members of Congress regularly propose changes that may extend the solvency of the Trust, and the Office of the Chief Actuary will typically provide a response with projections in how the proposed change may or may not help and other implications it may have,” Zach Morris, managing partner and founder of Paces Ferry Wealth Advisors, told The Atlanta Journal-Constitution. The CMS analyzes statistics and calculates risks as well as performs economic and demographic studies to evaluate the program’s expenditures under present law and opposed modifications to present law.

So, what could Congress do to mitigate this issue?

“They could increase the Social Security Wage Base,” Morris said. “The Social Security Wage Base is the total amount of income that is charged by Social Security taxes. Last year that was $147,000. This year, it’s jumped up to $160,000. They’ve proposed increasing that even more as a possible way of capturing more revenue for the Social Security Trust.”

Congress could also raise the age at which seniors can get full Social Security benefits. Something the U.S. Government previously did in 1983. Three months before insolvency, the U.S. government enacted the Social Security Amendments of 1983.

“After January 1, 1954, the full retirement age started to tick up,” Morris said. “So, 66 in two months, 66 and four months, and so on. When they made those changes, it was known at that time that Social Security would have to make further changes in order to maintain the program. They did not believe that was going to be a fix-all for the rest of the life of the Social Security Trust.”

If nothing is done, Social Security benefits could decrease by 24.9%, yet some experts doubt that it would get to that level, according to GoBankingRates. However, if you’re still unsure, consider your apprehensions when putting together a financial plan.

“I believe if people think that Social Security benefits are going to decrease by 10 or 15%, then they should adjust accordingly in their financial plans. Social Security makes up a big portion of people’s income in retirement,” Morris said.

As future generations approach retirement, their reliance on Social Security may decrease, according to Merrill.


Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).

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