There’s widespread concern about the sustainability of the Social Security program.
According to the Congressional Budget Office (CBO), the Social Security Old-Age and Survivors Insurance (OASI) trust fund reserves will be exhausted by the end of fiscal year (FY) 2033, while the combined Social Security trust funds (OASDI) will be insolvent by the end of 2034.
That’s just nine years away. Unsurprisingly, these headlines are causing some anxiety for workers who pay into the fund with every paycheck.
In 2023, financial expert Suze Orman attempted to ease these concerns with a post on LinkedIn. “payments will not stop,” she promised.
Here are the reasons why the personal finance guru believes Americans should be less pessimistic about the fate of the social safety net.
The biggest reason Orman isn’t concerned about the reserve depletion is because it wouldn’t halt social security payments, simply reduce them. “The worst-case scenario is that earned benefits would need to be cut by around 25% to deal with the cash shortfall,” she said.
This is also the conclusion of the CBO. By 2034, the office estimates that the OASI trust fund will have enough dedicated revenue to pay 75% of scheduled benefits.
Orman also points out that this isn’t the first time the social security system has faced a crunch. The trust fund was just three months away from depletion in 1983, when President Ronald Reagan and Congress jointly reformed the system.
“One of the biggest changes made back then was to gradually raise the full retirement age — when you are entitled to 100% of your benefit — from 65 to 67,” Orman explained. This helped keep the fund solvent.
She expects similar reform, which could impact retirees and people over the age of 55 but less so than younger workers.
While taxpayers can’t control legislative reforms or funding, they can control when they claim their benefits. “You can claim any time between age 62 and age 70. And every month that you delay earns you a slightly higher payout,” she said.
She recommends high-income and relatively healthy workers wait as long as possible to maximize their benefits.
