Social Security has just turned 89 years old, but there are questions about its solvency headed into the November presidential election.
The Social Security Act was signed into law by President Franklin D. Roosevelt on Aug. 14, 1935, as a way of establishing a federal benefits system for older Americans.
Today, Social Security’s trust fund for retirement benefits is projected to be depleted by 2033, leaving lawmakers up against the clock on possible solutions for saving the program.
A Gallup poll released in June revealed that 80% of Americans are “worried” or “extremely worried” about a lack of Social Security benefits being available to them when they need them.
Fox News Digital spoke with a financial planner who shared some of the greatest risks to Social Security in the not-too-distant future should Congress fail to act.
1. Reserve funds
There are essentially three groups of Americans who are affected by Social Security: those who are paying into it via federal withholdings from their paychecks, those who are ready to retire, and those who currently receive benefits.
Justin Rush, a financial planner in Novi, Michigan, told Fox News Digital he believes Social Security is “more secure than people give it credit for.” That’s because Social Security won’t cease to exist once the reserve funds are exhausted, he said.
“The reality is that, after that time, assuming nothing is done in the meantime, retirees would only receive around 83% of their benefits,” Rush said.
Rush also said he believes changes will need to be made to sustain it.
2. Retirement age
The retirement age to collect full benefits in 1935 was 65 years old.
But a law passed in 1983 gradually increased the retirement age to 67.
Republican Study Committee Chair Kevin Hern (R-Okla.) has proposed raising the retirement age to 69, as Fox News Digital previously reported.
“I think raising the age is a pretty frictionless way to start getting that equation more balanced,” Rush said this week.
Americans can claim Social Security payments as early as age 62, but the monthly payout amount decreases the earlier benefits are collected.
3. Payroll tax
The threshold for earnings that are subject to the Social Security payroll tax in 2024 is $168,600.
Workers with wages equal to or more than that amount stop paying into the program once they contribute $10,453.20, or 6.2%, of their salary, with their employer paying the same amount, according to the Social Security Administration.
Democrats have proposed requiring the wealthy to pay more into the program, seeking to make earnings over $400,000 subject to payroll taxes.
Opponents of removing the cap argue that it will lead to a disparity in benefit payouts upon reaching retirement age, Rush said.
“The opponents to that — that’s exactly their argument,” said Rush. “[It’s] that if we take the cap off this now, we’re going to weaken that link between the amount that you’re paying into it and then the amount that you receive once you retire.”
Added Rush, “So, a lot of the people [who] are against increasing that cap, that’s exactly the reason why they’re against it.”
4. Population growth
The United States population in 1935 was about 123.2 million people, according to U.S. Census Bureau data at the time.
Today’s population is more than 331.4 million people, according to the latest data from 2020.
“I think in general, just the overall aging of our population is certainly a huge risk to how everything is set up,” Rush said.
“So, as time goes on, we’re going to have a larger and larger population of older people collecting Social Security and fewer and fewer younger folks paying into the system.”
Rush said that’s contributed to the depletion of reserves.
“And I think that’s only going to continue, as far as that trend goes, unless Congress comes to the table and does something about it,” he said.
5. Life expectancy
Hern the average life expectancy in the US was in the early 60s when Social Security began.
Today, the average life expectancy is in the late 70s.
“So, you’re living [more] years on a program that was never designed to … be that way,” Hern said in April.
Rush agreed. “Not only will you have more and more people claiming Social Security, but they’ll be claiming it for a lot longer,” he said.
Some younger Americans are already operating on the assumption that there won’t be anything left in the Social Security pot by the time they reach retirement age, Rush said.
“We are seeing more younger clients and younger families [who] want to not rely on that whatsoever when it comes to making sure that they’re able to live, secure [a] retirement and get to retirement,” he said.
“They don’t want to have Social Security be a part of that picture.”
Rush said he considers the future of Social Security a bipartisan issue.
“I think it is in both parties’ best interests to figure out some solution.”
