Concerns about Social Security running out of money pop up from time to time in the financial media. Beyond the headlines are a number of misconceptions regarding what that really means. Below I’ll explain what could happen and what the consequences might be. The situation is a lot less dire than the media would have you believe.
There are two primary sources of funding for Social Security benefits: the Social Security trust fund and payroll taxes collected from current workers and their employers. The trust fund currently holds approximately $2.8 trillion but is projected to become depleted by 2034, based on the number of retirees drawing benefits over the next 15 years.