Is The Social Security Trust Fund At Risk?

Recent 8% “Inflation Boosts” in Monthly Checks May Eat into Future Payments

One big aspect of retirement planning, of course, is Social Security. The Social Security trust fund has been expected to be depleted in 2034, but the Social Security Administration has just issued a new report saying that stronger than expected economic growth has resulted in more payroll taxes. And as a result, the trust fund will not be depleted in 2034 - it'll be depleted in 2035 or one year’s grace. SSA also notes that fewer people are applying for disability payments.

But let's not get terribly excited here.

First of all, going from depletion of 2034 to 2035, is that really all that big a deal? Is that really all that significant? I don't think so. More importantly, that report was written before the Social Security Administration increased retirement benefits 8% for the next year. The report says they expected the increase to be under 4%. So even though officially the Social Security Administration is saying that the trust fund will be depleted in 2035, my anticipation is that it'll be actually depleted in 2032 or 2033.

What Happens To Your Monthly Social Security Check When The Money Runs Out?

You need to be paying attention to this for your own retirement planning because under current law, when that trust fund gets depleted, Social Security benefits will be cut 25%. So if you're thinking you're going to get $2,000 a month from Social Security starting in about a decade, that $2,000 check is going to be cut to about $1500. You need to keep that in mind.