Can You Still Count on Social Security for Retirement Income if You’re in Your 40s?

There are millions of older Americans today who use their monthly Social Security benefits to cover their essential retirement expenses. And without that money, many would struggle.

If you’re in your 40s and retirement is still another 20 to 25 years away, you may be wondering if Social Security will still be around by then. And the answer is, despite the rumors that Social Security is about to go bankrupt, there’s no reason to believe you won’t be able to collect monthly benefits in 20 to 25 years from now. It’s just a matter of how much money you’ll actually get.

Here’s what’s going on with Social Security

A lot of workers today are worried that Social Security won’t be around by the time they retire. But people who think that way are buying into false information.

The truth is that Social Security is facing a financial shortfall in the coming years as baby boomers retire in droves and strain the system by claiming benefits at the same time. And so Social Security’s financial obligations are expected to exceed the revenue it brings in.

Social Security can tap its trust funds to keep up with benefits for a period of time in this scenario. But once those trust funds are out of money, Social Security may have to cut benefits across the board.

That’s a pretty scary thought for retirees today. And it may not be great news for current workers.

But there’s a world of difference between Social Security cuts and Social Security disappearing. And the latter scenario is not on the table, despite the rumors you may have heard.

Why Social Security can’t go broke completely

There’s a simple reason Social Security should still be able to pay retirement benefits in the future. The program gets the bulk of its revenue from payroll taxes. And those aren’t going away.

Even if that revenue stream shrinks as baby boomers exit the workforce and a smaller number of replacement workers come in, Social Security will still get funded to some degree. So if you’re in your 40s, there’s no reason to think you won’t get benefits in retirement. You just may not get as large a benefit as you’d normally be entitled to.

And even benefit cuts aren’t a given. Lawmakers know they’d likely have a senior poverty crisis on their hands if they were to sit back and allow Social Security to be cut. So there’s a good chance they’ll arrive at a solution to avoid that scenario.

Of course, it’s a smart idea to plan for Social Security cuts by saving well during your career. And even without cuts, you shouldn’t plan to retire on Social Security alone, since those benefits will only replace a limited portion of your paycheck — and you don’t want to be cash-strapped later in life.

But all told, you don’t want to buy into the myth that Social Security is going to disappear. Thinking that way will only cause you undue stress you could do without.