Millions of seniors today collect a monthly benefit from Social Security. And often, it's that very benefit that allows them to cover their living costs and basic needs since, unfortunately, a lot of retirees do not have much in the way of savings.
But many workers today worry that Social Security won't be around for them once they're ready to retire. And that's understandable.
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Social Security is facing a revenue shortfall as baby boomers leave the workforce in droves. And while the program can tap its trust funds to keep up with scheduled benefits for a limited period of time, once those trust funds run dry, things get murky.
But recently, Social Security's Chief Actuary had some reassuring words about the future of the program. So if you're worried you won't be in line for any benefits at all, you may want to hear what he had to say.
Social Security is not going away
Social Security's Chief Actuary Steve Goss recently spoke on the topic of the program's impending financial shortfall. And while he did acknowledge that benefit cuts may be inevitable once the program's trust funds are depleted, he was quick to reassure listeners that Social Security can remain viable beyond that point.
"People should not worry about the trust fund running out of money, as is sometimes said, and having an inability to pay any benefits. Sort of the probably worst-case scenario here is that we within 10 years reach a point where we can only pay about 80% of the level of benefits that are scheduled or intended into law by Congress as of that point in time and going forward."
He also owned up to the fact that while 80% of benefits is clearly not 100%, "it's a long way from not having any money to pay for any benefits."
That's a huge distinction. The reality is that a 20% cut in benefits could be financially catastrophic to seniors who get most or all of their income from the program right now. And that's a situation that lawmakers will absolutely have to address.
But if you're many years away from retirement, you should take comfort in the fact that Social Security will, in fact, be there for you down the line. You should also take advantage of the heads-up you're getting about potential benefit cuts so you can make an effort to boost your savings accordingly. With ample notice, a 20% cut to your monthly benefits might be something you can compensate for with relative ease if you begin building up a nest egg early on.
Stick to the facts
It's easy to blow Social Security's financial woes out of proportion and jump to the conclusion that the program is on the verge of disappearing completely. But that's just not what's happening. And it's important to make that distinction so you don't cause yourself needless stress.
It's also worth noting that even the aforementioned 20% cut in benefits is not guaranteed to happen. Social Security has been on the verge of slashing benefits in the past, and lawmakers have previously managed to come up with solutions to avoid that dreaded scenario.
With any luck, they'll be able to do it again this time around. But if not, know that there's a world of a difference between collecting reduced benefits throughout retirement and not collecting any benefits at all.
