Will Social Security disappear for 30- and 40- somethings?


Amey Stone posted in our Makeover Series that:

"I'm 42, so if I start collecting Social Security at age 67, that will be 25 years from now, or 2033. That puts me and my age group right at the sweet spot where we face real worry that our Social Security benefits could disappear just when we're starting to count on them."

That is actually a myth that some people have been using for political advantage to scare the folks who are now in their 30s and 40s. Don't worry Amey. It's not true. Let me set the record straight.

Right now 100% of all Social Security benefits are paid by income to Social Security from Social Security taxes and will likely be again in the future after the Baby Boomer wave has moved through the system. In fact only about 85% of current income goes to paying benefits and about 15% goes to building up the Trust Fund.

Changes were made in the early 1980s to build this Trust Fund for the Baby Boomer period when there would be more people collecting SS than paying into it. By the time the Trust Fund runs out of money most of these Baby Boomers will be dead, so the amount being paid out in SS benefits would again fall to about the same level we have now. Trust Funds won't even be needed to pay benefits until 2017.