The Social Security Administration’s (SSA) new report—that the agency’s trust fund would run out in 2034, a full year ahead of schedule—raised alarm bells in Washington and among senior advocacy groups, who have fiercely pushed for benefits to be continued at their current levels or expanded.

Once the SSA trust fund runs empty, Social Security will not be “bankrupt”—it will still have a reliable cash inflow due to taxes. However, as more “baby boomers” have retired, they have switched from paying taxes to collecting benefits, reversing the trust fund’s annual surplus and forcing it to burn through cash to continue paying benefits. Because the annual taxes are no longer enough to cover the cost of benefits every year, the benefits will be cut to keep Social Security from going into debt.

This problem predates the coronavirus pandemic, but the economic crisis that followed it was harmful to Social Security’s finances, as millions of taxpayers lost their jobs—and many more decided to enjoy early retirement and cash in Social Security before their “full retirement age.”

The prospect of these cuts—which would need to be around twenty to twenty-five percent across the board—has caused alarm for government bureaucrats and lobbyists alike. It has also led many average Americans planning for their futures to wonder if Social Security, a program that many have paid into for decades, to no longer be viable as a means of support during retirement.

Most Americans probably have nothing to fear. Social Security is a difficult problem to solve on Capitol Hill because a solution would either require raising taxes or cutting benefits—two unpopular solutions, alternatively alienating fiscal conservative and senior advocacy groups. Because the alternative—letting benefits be cut naturally in 2034—has the potential to be far more politically disastrous, though, most experts have not taken the prospect of the cuts with great alarm.

Even so, some have used the notion of the cuts to encourage Americans to save more independently of Social Security. They observe, for instance, that Social Security was only meant to preserve around 40 percent of a person’s pre-retirement earnings—not enough for most people to survive on alone.

To this end, they have suggested buying into 401(k) plans and Roth IRA accounts during a young person’s life, helping them to store money early in their careers and gain interest over time.

The average Social Security benefit is now roughly $1,500 per month—and this number will nominally increase next year, following a cost-of-living increase.

Trevor Filseth is a current and foreign affairs writer for the National Interest.

Image: Reuters