Despite actual financing issues, Social Security won’t fully run out of money before making monthly benefit payments.
Over the years, politicians and others have asserted that SSA will eventually fail.
Understanding Social Security Funding Mechanism
The federal program that provides people with an income when they retire or are unable to work due to a disability is relied upon by some 67 million Americans.
An advocacy group named SSW asserted in a tweet from June that it’s impossible for Social Security to go bankrupt while the suspicions continue to circulate in 2023.
It’s common to hear people refer to Social Security’s as pay-as-you-go. This is so because benefits are primarily paid for by a special payroll tax that is taken out of each of your paychecks.
Employers and employees must both contribute to Social Security’s payroll taxes.
According to AARP and the Center on Budget and Policy Priorities (CBPP), Social Security recipients will continue to receive monthly benefit payments as long as workers and companies continue to pay payroll taxes.
Additionally, certain beneficiaries of the program must pay income taxes on a percentage of their benefits, which goes toward supporting the program.
Read more: Plan Ahead: Social Security And SSI Payment Dates For 2023
Changes Needed to Ensure Future Benefits
For more than ten years, the SSA has warned Congress that it would eventually need to make changes to the scheduled benefits and revenue sources for Social Security.
The trust funds will ultimately run out of cash if politicians do nothing.
Beneficiaries would get smaller benefits as SSA would no longer receive any funding from payroll taxes.
According to the most recent annual trustees report, the OASI Trust Fund, which pays monthly payments to retired workers, their spouses, and survivors of deceased workers, is anticipated to be able to pay full benefits until 2033.
The program could only deliver 77% of the planned benefits at that time.
Read more: June Social Security Payments: Who Is Eligible For The $1,800?