Will Social Security Run Out?

Quick Answer

Cash reserves used for Social Security benefits are estimated to run out in 2034. When that happens, beneficiaries can still receive payments, but for 78% of the scheduled amount.

A social security card is under a stack of cash with coins laying on top.

Each year, millions of retired workers, people with disabilities and other beneficiaries receive Social Security Income (SSI) and Social Security retirement benefits. But asset reserves that are used to pay Social Security are projected to run out in 2034, which may be a concern if you're banking on that money for retirement. If Social Security does run out as projected, you'll still be entitled to benefits—but payments may be for less than the scheduled amount.

When Will Social Security Run Out?

In its most recent report, the board of trustees that oversees the Old-Age, Survivors and Disability Insurance (OASDI) program predicts Social Security reserves will be depleted in 2034.

It's worth noting, however, that Social Security reform between now and then could extend this timeline.

The depletion of Social Security reserves doesn't mean that payments will dry up entirely for you and people who already rely on them. The OASDI board of trustees expects payments to continue going out even after potential depletion, but predicts benefits will be reduced to 78%.

Let's consider that the average monthly benefit for a retiree is $1,665.18, according to March 2022 Social Security Administration (SSA) data. The reduction in benefits would drop the monthly benefit payment to $1,298.84, or 78% of the current average monthly benefit.

While receiving some cash is better than nothing, a decrease this large could substantially change a retiree's budget and covering the gap is something to plan for.

Why Is Social Security Running Out?

As the baby boomer generation leaves the workforce, the number of Social Security beneficiaries is increasing faster than the population of workers contributing to the trust.

Money in the Social Security fund comes from income collected through payroll tax and interest earnings on trust assets. People are living longer, and generations that came after the baby boom have lower birth rates, which translates to fewer workers paying into Social Security.

While there are still billions of dollars sitting in trust, the OASDI board of trustees reports that the amount of money flowing out has increased faster than the trust's non-interest income since 2008, resulting in a forecasted cash shortage.

How to Supplement Social Security Income

Depleted Social Security cash reserves means more of the retirement planning burden could fall on your shoulders. That's why it's even more important to review your finances, calculate how much income you'll need in retirement and decide where that income will come from. Here are some strategies that could help you supplement your retirement income:

  • Invest early. Building personal wealth can give you more cash to draw from in your golden years. The historical stock market return is 10% per year, according to government estimates, and the more time your money has to grow, the more you'll have in retirement. Even if you need to invest small amounts at first, it's good to start somewhere.
  • Max out retirement accounts. If your employer offers a 401(k) match, work toward maxing out the match to get all of the free money that the company offers. In addition to your 401(k) savings, consider opening up a Roth IRA or traditional IRA to stash extra cash. Both accounts have tax advantages: Roth IRAs let you make tax-free withdrawals in retirement, and traditional IRA contributions can be deducted on your income tax return. The maximum you can contribute to an IRA in 2022 is $6,000 (or $7,000 if you're 50 or older).
  • Consider a reverse mortgage. A reverse mortgage is a type of mortgage for homeowners 62 or older who have sufficient equity in their home. Instead of making mortgage payments, the lender makes payments to you from the equity you've built up, either in a lump sum or installments. While access to cash is a definite plus, there are also reverse mortgage downsides to consider, including costs and future burden on your heirs.
  • Work part time or start a business. Retirement doesn't look the same for everyone. Instead of leaving the workforce entirely, you could transition to another field or set up a business to earn extra income.

How Will You Cover the Gap?

Whether retirement is decades away or just around the corner, start making decisions now to plan for how you'll cover a potential shortfall in Social Security payments.

Many retirement calculators exist online to help you do the math on how much savings you'll need to supplement Social Security in retirement and lead the lifestyle you desire. If you need help coming up with a plan, meeting with a financial advisor could also help put you on the right path.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through December 31, 2022 at AnnualCreditReport.