Planning Newsletter - April 2025
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Some are worried that Social Security may not be there when they retire. Even without increasing taxes, the Social Security system is projected to be able to pay 73% of promised benefits all the way out to the year 2098.
The primary source of Social Security funding—payroll taxes—is continuous. As long as people are working, the system collects revenue. Currently, payroll taxes cover about 77-80% of benefit payments even without trust fund reserves.
Unlike private financial schemes, Social Security is backed by the full faith and credit of the U.S. government. Congress has adjusted Social Security multiple times in its history, including the 1983 reforms, which raised the retirement age and increased payroll taxes to stabilize funding. Future adjustments will likely follow a similar path.