There have been rumors circulating for years about Social Security's impending demise. As someone who writes about the program on a regular basis and stays up to date on changes, I can tell you that Social Security is not in danger of disappearing completely.
Social Security's main source of revenue is payroll taxes. So as long as we have a labor force and continue to have workers pay into the program, Social Security can carry on in some capacity.
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What may happen, though, is that in time, Social Security could exhaust its trust funds and be forced to cut benefits universally. Benefit cuts may be avoidable if lawmakers manage to find a way to pump more money into the program, but so far, there are no official solutions in the works.
While I'm certain that Social Security isn't in danger of going away, I'm also trying to pretend that it is. And the reason boils down to motivation to build savings.
When you need a little push
I know full well that even if Social Security cuts don't end up happening, those monthly benefits won't be enough to sustain me in retirement. But I also know that it's hard to push yourself to build retirement savings when you have loads of other near-term bills, like mortgage payments, and children who want things, like new clothing and vacations.
That's why I like to tell myself that Social Security won't be there for me in retirement -- even though I know that's not true. The way I see it, pretending that the program won't exist pushes me to max out my retirement plan contributions year after year.
I also need to consider that Social Security's finances are shaky. It would be one thing if I knew there was a certain monthly benefit I could expect to collect at a later point in time. But at this point, I have no idea what benefit to anticipate because I don't know if cuts will happen, and if if they do, how bad they'll be.
To put it another way, it's just easier in some ways to run my personal retirement calculations without factoring Social Security into those numbers. If I tell myself I'll solely be reliant on savings to pay my bills down the line, then any money that comes in from Social Security can be pure gravy -- cash I can use to travel or do other things that aren't essential but are nice, nonetheless.
It's good to be realistic
I don't like the idea of people panicking over the idea of Social Security going away completely. So I would never want to trick workers into thinking it's disappearing on them.
But I do think there's some value in planning for a retirement that doesn't include Social Security. So while I won't tell you that the program is about to come to an end -- since that's blatantly not true -- I will tell you that if you're able to figure out a way to cover your expenses in retirement without Social Security, you'll be in a much better place financially.
