Will Social Security Run Out of Money?

The short answer is no, but the value of benefits may erode over time.

The long term viability of the Social Security program is a recurring topic.  Recently, the Social Security Administration reported that this year retirement benefits paid out each month are exceeding the tax revenues and interest that fund the program.  Consequently, it is now estimated that, by 2034, reserves will have been depleted and projected revenues will cover only about 80% of promised benefits.

This is a problem, not a crisis, and is likely to be dealt with by policy makers.

We at Sigma are not policy makers.  We are investment counselors.  It should be noted that Social Security payments were never intended to provide 100% of an individual’s retirement income requirements.  Just as in the case of Medicare, which does not cover all of your healthcare expenses, you have some responsibility for funding your later years.

It is incumbent on all of us to work with our advisor(s) to formulate an appropriate retirement plan.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA