3 Reasons Why Social Security Isn’t As Unreliable As You Think – Community News
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3 Reasons Why Social Security Isn’t As Unreliable As You Think

Here’s an alarming headline from this summer: “Social Security Funds Now Expected to Run Out of Funds Earlier Than Expected Due to COVID, Treasury Says.” You may have seen it (or a similar headline), and it may have brought you to despair.

Take heart though — things aren’t as bad as they seem, and the Social Security program isn’t as dodgy as you might think. Here are three reasons why.

A smiling person in a park is holding a dog.

Image source: Getty Images.

1. Many Employees Still Contribute Through Taxes

For starters, there isn’t one solid pile of money that runs out quickly. Social Security works by collecting income from working people through taxes and then paying benefits to retirees.

For many years the ratio of workers to beneficiaries was high, creating a surplus in the social security coffers. However, in recent decades, people are living longer and many people have retired earlier, reducing the ratio.

Here’s how that employee-beneficiary relationship has changed over time:


Employee to beneficiary ratio




















2.2 (estimated)

Data source: Social Security Administration.

The contraction ratio has forced the program to draw on its reserves, which are also dwindling. The latest report from Social Security regulators is that reserves will dry up in 2033 – a year earlier than previously expected. But even if that happens, money will still flow into the program from employee taxes.

2. The worst case scenario still delivers most of your benefits

When 2033 rolls around, if Social Security reserves are exhausted, beneficiaries will still receive their benefits – but they may not receive 100% of the amount they are entitled to. Recent estimates are that they would collect about three quarters of them instead. So if you would normally receive a benefit of, say, $2,200 per month, it could drop to about $1,650.

Which is doing stink, if it happens, and it can make life much harder for the many millions whose financial survival depends largely on Social Security. But getting about 75% of your benefits is still better than getting nothing. Many headlines suggest that retirees will receive $0, which is not the case.

3. Social security can be strengthened

Here’s some good news: The status quo — Social Security’s current trajectory — may be concerning, but it’s not set in stone. There are many ways that those in Washington, DC can support the program, making the beneficiaries complete or even increasing the benefits.

For example, the tax of 12.4% that employees pay to Social Security could be increased. (Most employees pay half of that 12.4%, or 6.2%, with their employer paying another 6.2%; the self-employed pay the full 12.4% themselves.) The Congressional Research Service has estimated that it rate is increased from 12.4% to 13.49% would eliminate 66% of the expected deficit.

Another effective solution is to increase or eliminate the income cap. You may not realize it, but there is a maximum amount of income on which you pay Social Security taxes annually. For 2021 it is $142,800. By 2022, it will be $147,000. So in 2022, someone who earns $1,147,000 will pay the same amount to Social Security as someone who earns $147,000. Someone who earns $30,147,000 will pay the same amount. That limit could be increased to, say, $500,000, and it will bring more revenue to Social Security. Some argue that doing away with the cap completely would be fairest.

Taking all these factors into account, it is clear that Social Security is not going to evaporate any time soon. Our government has the power to bring it back to its former glory or even make it stronger. If you feel strongly about Social Security, you may want to reach out to your representatives to share your thoughts on this vital program.