Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind.
Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.
If nothing is done it’s a mathematical fact. The problem is that there are no plans to do anything yet, each administration and congress seeing it as too politically volatile to deal with, which means we will have a last minute suboptimal solution.
Obviously there are solutions. Maybe if America survives that long we might see one implemented.
Sure, if nothing is done. The trust fund redeeming its bonds is little different than the congress appropriating money for Social Security benefits; both come out of the current revenue of the USG. When the trust fund no longer has any bonds to redeem, there's nothing stopping congress from continuing to transfer money into Social Security to pay benefits at existing levels. They'll just have to vote on it rather than it happening automatically.
I never imagined that, in my lifetime, Roe would be overturned or that entirely untrained federal thugs would be allowed to murder people on video with no repercussions at all… we live (as others often have) in strange times.
A quick check (ie, letting ChatGPT do the math) shows that if all caps on taxation was eliminated, it would help, but not solve the problem completely.
Being convinced of disreality is a pervasive weapon that keeps being leveraged by the valent evil bad forces to make things worse and worse. Gladly tying the blindfold around your eyes should not be allowed to look as cool as this kind of post tries to exude.
Theres something so PKD about these fake realities, that have breached any and all containment, that people so readily deny any sense & sensibility. Just because. It's caused such huge disasters already. But it feels like still so many slumber on, that camp Wide Awake suffers so.
Brandolini's Law, the Bullshit Asymmetry Principle lurks below every reality based discussion, waiting for any chance to plunge thr pariticpants through to the unfathomable depths of unreality. It's a bitch of a structural advantage to be able to leave engagement and caring and discussion behind at any point, and plunge into that freezing alien other, to leave reality behind.
I wish i could just opt out of social security and invest the money myself. I'd pay the long term cap gains tax if this was an option, and I'd come out way ahead. The federal government can only mishandle money.
Maybe we need two systems:
1. You may move to be a certified responsible saver. You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to.
2. Mandatory saving for everyone else (reading other countries, seems like this happens elsewhere). Money is pooled and invested into US companies. Investments must produce at least 8% return annually over 10 year rolling period or something, else corporate assets are forfeited (someone more saavy than I needs to figure that policy out).
Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions?
In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after you turn a particular age, if your assets are below a threshold. But if X were too high the Government would need to raise taxes, borrow money or print money to fund it, like all government spending.
Separately, we have superannuation - which I think is similar to 401k except compulsory for employers to pay 12% of your salary into, which are personal retirement savings held in trust to be released at your retirement, but generally these are account-based and in addition to the pension if you are eligible (i.e what you put in is what you get out).
There are older "defined benefits" superannuation funds where payouts aren't account-based (I think based on years of service in government roles or something like that) but they have been phased out to avoid the moral hazard of something government-adjacent having pension liabilities they cannot meet with their member's funds.
So what exactly is Social Security if it can run out? It sounds like a defined-benefits fund that is run by the government - in which case why has nobody closed it off to new members like Australia did when the writing was on the wall?
I think the first key point is that it isn't defined-benefits, not in the sense that there's a balance with your name on it. There's also no constitutional barrier to the legislature passing a law to alter the benefits.
> Can someone explain the legal structures in place in the US that make Social Security "run out"?
It's grown a lot of bells and whistles over time, but at the core it fits its legal name, Old-Age, Survivors, and Disability Insurance. [0] The premiums for coverage are collected as a tax on the working, and the payout conditions involve being alive and unable to properly support yourself. (Above an age-range, you get the benefit of the doubt.) If someone dies healthy and young, they don't get anything, the same way that house-burns-down insurance pays nothing if your house was swept away by a tsunami instead.
The program's surplus (largely from demographic shifts) is invested in bonds with the US government, meaning that there's an intra-governmental credit/debt going on, where OASDI/SS is the creditor and government-in-general is the debtor. Most of the "run out" talk refers to a period of time where the surplus is finally used up.
At that time, the program may need to change to avoid going into debt, with one or both of: (A) Congress passes a law increasing premiums/taxes on current workers; (B) Congress passes a law saying it's OK to pay less than the program did before.
> So what exactly is Social Security if it can run out? that is run by the government
[0] Big banks try to mislead the public into thinking it's like a collection of personal investment accounts. This is because they can't profitably compete with what it actually is.
Active service in a recognised danger zone ups the pension rate and expands the health benefits (as does exposure to fallout - they like to medically track anyone touched by atomic testing).
Social security is funded through payroll taxes on employees and emloyers. The "run out" is in the sense of the amount of money going out exceeds that coming in and the saved funds have been depleted. In this sense, it can "run out" that the savings are depleted and the plan is cash flow negative.
The narrative and word choices are deliberate. Republicans want to get rid of Social Security. So the narrative is Social Security is fundamentally broken, and it can be silently ended through passive negligence without having to take responsibility for ending a popular entitlement. No matter that it was created with the expectation that Congress would periodically adjust the retirement age to keep it solvent, and that it was always intended to provide only a bare minimum benefit, just enough to keep you out of the poor house. Poor houses were real, common things back then, and what the "free market" will result in.
Social Security revenue and expenditures can easily be balanced in theory. But neither party wants to do the right thing--Democrats want to expand entitlements, and increasing the retirement age as originally designed is the opposite of their goal.
I've known I can't really rely on Social Security to exist when I retire, in any notable form, but man, this is so dark. And it's just a start.
(Edit: I'm not certain either way! But it seems like too great a risk to rely on. And the prognosis seems not great! I have heard for decades needs serious help, and nothing seems to change. More broadly, with a few exceptions, I've seen overwhelmingly obstructionism and destruction of America in lifetime.)
This isn’t what my financial advisor told me and I doubt many others would, either.
Social Security is almost certainly going to exist in some form. The question is how much retirees will get from it and how that compares to the cost of living.
Excessive cynicism is often dangerous because it converts the mundanely pleasant reality into an enthralling doom and gloom scenario.
Of course, I’m not really saying that everyone in America is going to have a wonderful retirement. But if you’re like the other software engineers on this forum and you’re maxing out your 401k and have a mortgage, you’re almost certainly going to have a pretty enviable retirement.
Honestly, the reporting has looked the same around this since the 1980s. I've read books from them referencing how Social Security was going to be bankrupt by the 90s, or the 2000s. The fact is that older people vote way more than younger people, so it stays funded; we will at worst pay for some of it out of income taxes.
As others have pointed out, the date has long been mid/early 2030s.
You may be remembering that it’s been a hotly debated issue since the 80s.
I distinctly remember it being a massive election issue in 2000 between Gore and Bush (the first election I’m old enough to remember in detail). It was the whole “lockbox” vs government funding of private accounts debate.
The math has been constant, if you were reading reports saying it would hit the breaking point in the 90s or 2000s, you are either misremembering, confusing it with something else, or willfully distorting facts. Anyways, if you make claims like that you should take advantage of internet linking features and just provide your evidence directly vs a “I remember reading” anecdote.
There was a point where social security went from surplus to deficit in 2010. That wasn’t insolvency though since the federal government owed them for the previous surpluses they borrowed. 2033 is when the federal government no longer has to pay back money to SS and it is truly insolvent.
Governments, when faced with shortfalls in the government pension, will absolutely nationalize your 401k or IRA.
YOU, while attempting to responsibly take care of yourself, will absolutely be a piggybank to be raided. This has happened in numerous countries.
You wouldn't want to be selfish, would you? Sure, you forgo the midlife crisis sports car in favor of the Toyota Corolla you've been driving for years, but that's just tough. Shoulda lived for the now.
It doesn’t even have to be raiding of accounts. They can modify rules of RMD to drive tax revenue or even entirely change the rules of 401k withdrawals such that if your balance is over a certain amount you pay an extra tax.
I don’t think it’s far fetched that 401ks of a certain value start to experience penalties to make up shortfalls. After all, the whole reason they would need to do this is because they failed on the promise of social security. Why not fail on the promise of the 401k?
1. It upsets the most influential voting demographics. I struggle to find any national policy implemented in the last few decades that has truly disrupted the kind of upper middle class voter that has a lot of money in a 401k.
2. If you tax 401ks higher than long term capital gains tax then higher earners just won’t use 401ks/IRAs.
3. 401ks and IRAs are completely detached from the way social security is funded so they aren’t even really the most logical place you would go to fund social security. E.g., why not just raise the social security payroll tax?
5. It’s less logical to do this than to remove the social security tax cap.
Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind.
Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.
If nothing is done it’s a mathematical fact. The problem is that there are no plans to do anything yet, each administration and congress seeing it as too politically volatile to deal with, which means we will have a last minute suboptimal solution.
Obviously there are solutions. Maybe if America survives that long we might see one implemented.
The hole can be filled overnight by just raising the retirement age.
And if you normalize for longer lifespans, it's perfectly reasonable.
People are living longer sure, but are they fit for work longer?
Or just living longer with dementia and stuff?
Sure, if nothing is done. The trust fund redeeming its bonds is little different than the congress appropriating money for Social Security benefits; both come out of the current revenue of the USG. When the trust fund no longer has any bonds to redeem, there's nothing stopping congress from continuing to transfer money into Social Security to pay benefits at existing levels. They'll just have to vote on it rather than it happening automatically.
I never imagined that, in my lifetime, Roe would be overturned or that entirely untrained federal thugs would be allowed to murder people on video with no repercussions at all… we live (as others often have) in strange times.
A quick check (ie, letting ChatGPT do the math) shows that if all caps on taxation was eliminated, it would help, but not solve the problem completely.
This is fantasy. There's nowhere for the money to come from. They're going to raise the age, reduce benefits.
Tax rates could be raised, especially on the wealthy, who enjoy historically low tax rates.
Being convinced of disreality is a pervasive weapon that keeps being leveraged by the valent evil bad forces to make things worse and worse. Gladly tying the blindfold around your eyes should not be allowed to look as cool as this kind of post tries to exude.
Theres something so PKD about these fake realities, that have breached any and all containment, that people so readily deny any sense & sensibility. Just because. It's caused such huge disasters already. But it feels like still so many slumber on, that camp Wide Awake suffers so.
Brandolini's Law, the Bullshit Asymmetry Principle lurks below every reality based discussion, waiting for any chance to plunge thr pariticpants through to the unfathomable depths of unreality. It's a bitch of a structural advantage to be able to leave engagement and caring and discussion behind at any point, and plunge into that freezing alien other, to leave reality behind.
I wish i could just opt out of social security and invest the money myself. I'd pay the long term cap gains tax if this was an option, and I'd come out way ahead. The federal government can only mishandle money.
Maybe we need two systems:
1. You may move to be a certified responsible saver. You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to.
2. Mandatory saving for everyone else (reading other countries, seems like this happens elsewhere). Money is pooled and invested into US companies. Investments must produce at least 8% return annually over 10 year rolling period or something, else corporate assets are forfeited (someone more saavy than I needs to figure that policy out).
Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions?
In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after you turn a particular age, if your assets are below a threshold. But if X were too high the Government would need to raise taxes, borrow money or print money to fund it, like all government spending.
Separately, we have superannuation - which I think is similar to 401k except compulsory for employers to pay 12% of your salary into, which are personal retirement savings held in trust to be released at your retirement, but generally these are account-based and in addition to the pension if you are eligible (i.e what you put in is what you get out).
There are older "defined benefits" superannuation funds where payouts aren't account-based (I think based on years of service in government roles or something like that) but they have been phased out to avoid the moral hazard of something government-adjacent having pension liabilities they cannot meet with their member's funds.
So what exactly is Social Security if it can run out? It sounds like a defined-benefits fund that is run by the government - in which case why has nobody closed it off to new members like Australia did when the writing was on the wall?
> It sounds like a defined-benefits fund
I think the first key point is that it isn't defined-benefits, not in the sense that there's a balance with your name on it. There's also no constitutional barrier to the legislature passing a law to alter the benefits.
> Can someone explain the legal structures in place in the US that make Social Security "run out"?
It's grown a lot of bells and whistles over time, but at the core it fits its legal name, Old-Age, Survivors, and Disability Insurance. [0] The premiums for coverage are collected as a tax on the working, and the payout conditions involve being alive and unable to properly support yourself. (Above an age-range, you get the benefit of the doubt.) If someone dies healthy and young, they don't get anything, the same way that house-burns-down insurance pays nothing if your house was swept away by a tsunami instead.
The program's surplus (largely from demographic shifts) is invested in bonds with the US government, meaning that there's an intra-governmental credit/debt going on, where OASDI/SS is the creditor and government-in-general is the debtor. Most of the "run out" talk refers to a period of time where the surplus is finally used up.
At that time, the program may need to change to avoid going into debt, with one or both of: (A) Congress passes a law increasing premiums/taxes on current workers; (B) Congress passes a law saying it's OK to pay less than the program did before.
> So what exactly is Social Security if it can run out? that is run by the government
[0] Big banks try to mislead the public into thinking it's like a collection of personal investment accounts. This is because they can't profitably compete with what it actually is.
> I think based on years of service in government roles or something like that
More or less, with qualifications and levels of degree.
Eg: Was the Second Malayan Emergency active or "peacetime": https://www.abc.net.au/news/2026-07-12/rifle-company-butterw...
Active service in a recognised danger zone ups the pension rate and expands the health benefits (as does exposure to fallout - they like to medically track anyone touched by atomic testing).
Social security is funded through payroll taxes on employees and emloyers. The "run out" is in the sense of the amount of money going out exceeds that coming in and the saved funds have been depleted. In this sense, it can "run out" that the savings are depleted and the plan is cash flow negative.
The narrative and word choices are deliberate. Republicans want to get rid of Social Security. So the narrative is Social Security is fundamentally broken, and it can be silently ended through passive negligence without having to take responsibility for ending a popular entitlement. No matter that it was created with the expectation that Congress would periodically adjust the retirement age to keep it solvent, and that it was always intended to provide only a bare minimum benefit, just enough to keep you out of the poor house. Poor houses were real, common things back then, and what the "free market" will result in.
Social Security revenue and expenditures can easily be balanced in theory. But neither party wants to do the right thing--Democrats want to expand entitlements, and increasing the retirement age as originally designed is the opposite of their goal.
"If we do nothing about this obvious problem for the next decade it will be catastrophic."
Ok
I've known I can't really rely on Social Security to exist when I retire, in any notable form, but man, this is so dark. And it's just a start.
(Edit: I'm not certain either way! But it seems like too great a risk to rely on. And the prognosis seems not great! I have heard for decades needs serious help, and nothing seems to change. More broadly, with a few exceptions, I've seen overwhelmingly obstructionism and destruction of America in lifetime.)
This isn’t what my financial advisor told me and I doubt many others would, either.
Social Security is almost certainly going to exist in some form. The question is how much retirees will get from it and how that compares to the cost of living.
Excessive cynicism is often dangerous because it converts the mundanely pleasant reality into an enthralling doom and gloom scenario.
Of course, I’m not really saying that everyone in America is going to have a wonderful retirement. But if you’re like the other software engineers on this forum and you’re maxing out your 401k and have a mortgage, you’re almost certainly going to have a pretty enviable retirement.
Indeed. The worst case scenario with no action is a ~30% cut in benefits; that's a long way from a 100% benefit cut.
Honestly, the reporting has looked the same around this since the 1980s. I've read books from them referencing how Social Security was going to be bankrupt by the 90s, or the 2000s. The fact is that older people vote way more than younger people, so it stays funded; we will at worst pay for some of it out of income taxes.
As others have pointed out, the date has long been mid/early 2030s.
You may be remembering that it’s been a hotly debated issue since the 80s.
I distinctly remember it being a massive election issue in 2000 between Gore and Bush (the first election I’m old enough to remember in detail). It was the whole “lockbox” vs government funding of private accounts debate.
The math has been constant, if you were reading reports saying it would hit the breaking point in the 90s or 2000s, you are either misremembering, confusing it with something else, or willfully distorting facts. Anyways, if you make claims like that you should take advantage of internet linking features and just provide your evidence directly vs a “I remember reading” anecdote.
There was a point where social security went from surplus to deficit in 2010. That wasn’t insolvency though since the federal government owed them for the previous surpluses they borrowed. 2033 is when the federal government no longer has to pay back money to SS and it is truly insolvent.
Exactly this. The date has been very consistent for many years, and the math checks out. 2033 unless something significant changes.
It's much worse than that.
Governments, when faced with shortfalls in the government pension, will absolutely nationalize your 401k or IRA.
YOU, while attempting to responsibly take care of yourself, will absolutely be a piggybank to be raided. This has happened in numerous countries.
You wouldn't want to be selfish, would you? Sure, you forgo the midlife crisis sports car in favor of the Toyota Corolla you've been driving for years, but that's just tough. Shoulda lived for the now.
This is just wild hyperbole.
Yes, tax rates might go up. You should actually bet on that because tax rates are at a pretty low level historically.
But this concept of nationalizing private bank accounts is pretty extreme.
It doesn’t even have to be raiding of accounts. They can modify rules of RMD to drive tax revenue or even entirely change the rules of 401k withdrawals such that if your balance is over a certain amount you pay an extra tax.
I don’t think it’s far fetched that 401ks of a certain value start to experience penalties to make up shortfalls. After all, the whole reason they would need to do this is because they failed on the promise of social security. Why not fail on the promise of the 401k?
It’s far-fetched for a number of reasons:
1. It upsets the most influential voting demographics. I struggle to find any national policy implemented in the last few decades that has truly disrupted the kind of upper middle class voter that has a lot of money in a 401k.
2. If you tax 401ks higher than long term capital gains tax then higher earners just won’t use 401ks/IRAs.
3. 401ks and IRAs are completely detached from the way social security is funded so they aren’t even really the most logical place you would go to fund social security. E.g., why not just raise the social security payroll tax?
5. It’s less logical to do this than to remove the social security tax cap.
Wrong.
https://politics.stackexchange.com/questions/20203/why-would...
This seems like it’s a completely different style of system to the point where it’s not comparable.