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Headlines were made earlier this year when it was announced that the Social Security Trust Fund would be depleted in 2033—one year earlier than previously projected due to the economic damage of the past two years. With this in mind, should you count on having Social Security when you retire?

What is the Social Security Trust Fund?

First, it helps to explain what the trust fund is and how this headline might be misleading. Social Security taxes are taken from your paycheck. You and your employer share equally in the tax. These taxes aren’t paid into an account with your name on it. Instead, these taxes pay the benefits of current retirees.

For years, there were sufficient workers to pay the benefits of retirees plus an excess. This excess was paid into a trust fund. But with changing demographics, there are currently not enough workers paying into Social Security. As a result, the Social Security Administration has dipped into funds from the trust to pay current benefits.

Will Social Security be gone in 2033?

Here’s where the misunderstanding might occur. Dipping into the trust doesn’t mean Social Security is projected to be gone in 2033. Remember, benefits are paid by payroll taxes of current workers. This announcement states that the trust fund is projected to be drained in 2033. So, whatever is not covered by payroll taxes will be gone.

It’s projected that in 2033 about 76% of benefits will be covered by payroll taxes. That means retirees would see a reduction of 24% if the trust fund is indeed drained.

So, what does this mean for you?

Social Security probably won’t go away.

First, I doubt Social Security will be gone. Not only will payroll taxes still provide funding for partial benefits, but Social Security is popular among both Republicans and Democrats. With political support on both sides of the aisle, it makes sense that the program will continue to be around.

You should plan on reduced benefits.

However, it would be prudent to take into consideration a reduction in your future benefits. Using the projections from the Social Security Administration, a 24% reduction would be a good starting point.

How do you do this? First, you can create an account on the Social Security Administration’s website. Your online statements will provide projections of your future benefits. Simply reduce these benefits by your desired amount to see how the changes will affect you.

You should increase retirement savings.

Social Security was never meant to be a retiree’s primary income vehicle. Most of your retirement should be from your own savings. With the possibility of reduced Social Security benefits, it’s never been more important to increase the amount of money you are putting away.

What can Congress do to protect retirees?

First, Congress can increase the amount of income subject to Social Security tax. In 2022, the amount is $147,000. This means that an amount a worker earns above $147,000 is not subject to the Social Security tax. By increasing this limit, more taxes will be levied for Social Security.

Second, the investments inside the trust fund can be expanded to include securities with higher expected returns like stocks. By law, all funds in the trust must be invested in Federal government securities.

Whatever the solution, Social Security is a popular government program that will likely be with us for a long time. This being said, using reduced benefits is a prudent choice if you are planning for retirement.