Social Security: Will it be there for you?

Luke Strom, Megan E. Gehrman CFP® and Steven Finkelstein CFP®

There are more than 10,000 American workers turning 65 years old each day—and that number is only increasing as we see the baby-boom generation start closing in on their long-awaited retirement.

To that end, you may have heard some fairly dire predictions from friends, family members, coworkers and others about Social Security running out of money—which is an entirely frightening prospect for many who are set to rely heavily on that income during retirement.

Let’s discuss a few of the most common questions and myths we at Sterling Retirement Resources hear from clients and prospects:

Social Security won’t be there for me when I retire.

Social Security has actually taken in more money in taxes and other income than it has paid out in every year since the 1980s. At current projections, Social Security will continue to run at a surplus through 2022. Beyond that, benefits are expected to be fully funded through 2034 without any changes to the tax rates or benefit rates.

Even if Social Security exists when I retire, my benefits will be significantly different than what I'm seeing on my current statements.

There are a vast number of changes that can be made to Social Security in order to preserve and prolong benefits for generations to come. In the 1980s, under the Social Security Disability Benefits Reform Act, Social Security re-entered into a surplus by reducing new disability benefits, removing fraudulent benefits being collected and setting up procedures to review when disability benefits being paid should end. This is just one example of how changes to the program can be made to the system without making changes to normal retiree benefits.

What types of changes to Social Security might the government make that could impact my benefits?

Congress is likely to make changes to the Social Security system in the future to prolong the viability of the program for future generations. Here are some of the most widely supported changes that have been proposed (it’s likely a combination of these proposals would be enacted):

Increase the Social Security tax rate: Due to the lower number of workers paying into the system as the baby boomers retire, the tax rate paid into the system by workers could increase. (Currently, employees pay 6.2 percent, and your employer matches an additional 6.2 percent.)

Increase the wage limit for which Social Security taxes are collected: For 2021, the social security wage tax limit is $142,800. An increase in this wage limit would increase the amount of taxes paid into the system from higher wage earners.

Raise the full retirement age for benefits: This has been done before as we have seen the full retirement age for Social Security benefits increase from 65 to 66, and in 2027, increasing again to67. There has also been discussion of raising the early benefit election age of 62 so retirees might have to wait longer before they are eligible for benefits.

Reduce benefits for those with high savings or incomes: This is often referred to as “means testing” and would allow for Social Security to reduce (or even eliminate in some cases) benefits for those receiving income through other sources at specific rates. Just one example would be the possible reduction of benefits for this with income from other sources outside of Social Security in excess of$100,000.

So, what’s the bottom line? Social Security is an extremely complex yet important government program that is often discussed in an unfairly negative context. We think Social Security remains a very good deal for retirees today, tomorrow and in the future—although the program might look different than it does today.

Additionally, your individual decision around when and how to claim your Social Security benefits are more important now than ever before. There is no one-size-fits-all answer, and we recommend receiving guidance from a financial professional before making your decision.

Should you wish to learn more about the Social Security system, what benefits are available and a few creative strategies to consider when filing for your benefits, we invite you to join us for a complimentary Social Security workshop offered to AAA members this spring. Please seeAAA.comfor specific dates and details. Also, feel free to contact Sterling Retirement Resources at (763) 762-3400 with questions on this article or any other situations in your financial lives.


Steven C. Finkelstein, CFP®, Megan E. Gehrman, CFP®, and Luke J. Strom, CFP®are financial advisors at Sterling Retirement Resources, Inc., 8401 Golden Valley Road, Suite 225, Golden Valley, MN 55427. (763) 762-3400.

Securities and advisory services offered through Cetera Advisor Networks LLC, Member FINRA/SIPC, a Broker-Dealer &Registered Investment Advisor. Some advisory services also offered through AdvisorNetWealth Management. Cetera is under separate ownership from any other named entity.