Social Security Funds Face Earlier Depletion

Younger Generations Could Bear the Brunt of Looming Shortfall

The Social Security retirement trust fund now anticipates running out of money sooner than previously predicted, potentially impacting millions of Americans. This shift, brought about by several factors, highlights the urgency for decisive action to safeguard the program for the future.

Urgent Timeline

The annual Social Security and Medicare Trustees report indicates the fund could be depleted by 2033, earlier than last year’s projections. This accelerated timeline has been partly attributed to the Social Security Fairness Act signed by former President **Joe Biden**. This bill increased benefits for public sector workers who previously weren’t covered. Other factors include the potential for low birth rates in the U.S. and lower-than-expected wage growth.

“To right the ship, the Trustees note that more revenue would need to be collected—like through a payroll tax increase—or benefits will need to be reduced.”

—Social Security and Medicare Trustees Report

If Congress fails to intervene, a 23% reduction in benefits could be automatically triggered in just a few years. According to the Social Security Administration, nearly 67 million Americans received Social Security benefits in 2023, emphasizing the program’s widespread impact. (SSA Quick Facts)

Impact on Future Retirees

Financial planners are adapting their advice given these challenges. **Kevin Brady**, a certified financial planner at Wealthspire Advisors, observes that younger people face a higher likelihood of navigating a modified Social Security system upon retirement. He suggests incorporating stress tests into financial plans, potentially boosting savings or adjusting long-term goals.

Expert Perspectives

**Owen Malcolm**, a certified financial planner at Apollon Wealth Management, believes that comprehensive benefit cuts are improbable. He suggests that individuals focus on aspects they can control, such as early financial planning, savings, and wise decision-making.

“Over the years, changes to the program have tended to be incremental rather than drastic.”

—Owen Malcolm, CFP at Apollon Wealth Management

The latest updates to the program, such as the Social Security Fairness Act, have actually expanded benefits, he notes. It is important to consider whether lawmakers will opt to raise revenue through tax adjustments, modify the wage cap, or directly cut benefits, a decision likely influenced by the composition of Congress.