Here’s why Social Security is in trouble (tips inside!)

by | Jul 18, 2023

Big changes could be coming by 2034, and here’s what’s causing it … 

Social Security is a vital necessity that provides financial assistance to both retired and disabled individuals within the United States. It’s been known as a cornerstone of the American social safety net for a long time, but recent trends and challenges have turned it onto one of the most debated social programs in the US. 

How it’s funded and administered is called into question its long-term sustainability, making it a big topic of discussion for many. 

Here’s why Social Security is in big trouble! We’ll be exploring some of the most prevalent obstacles that Social Security needs to overcome in order to meet its objectives and get out of troubled water. And, we’ve made sure to include some valuable tips to help you navigate this complex issue too!

Here’s why social security is in trouble: The 5 biggest problems

1. Low interest rates

Like all savers, the Social Security program actually benefits from high-interest rates. We know – not something we’d usually ask for. 

But money paid into the Social Security system is invested in bonds and other high-quality securities that pay interest. When rates rise, Social Security earns more money, and in turn? Social Security becomes more solvent. 

However, rates were persistently low for years. Though they’ve now risen, if they don’t increase enough (or for a long enough time) the Social Security program will have to recalibrate with lower income for its beneficiaries. 

2. Increase in life expectancy = longer retirements

We all know that, since the days of dropping dead at 40, life expectancy has dramatically increased in the United States and is still rising. It’s been regarded as a pretty good thing for a while now. 

However, when it comes to the math associated with Social Security: longevity is dangerous! Longer life expectancy leads to higher total payouts. Which would be fine if the Social Security fund was an endless reservoir of cash. But it’s not and more money flowing out is only resulting in less money in the overall pool. It’s a big part of why Social Security is in so much trouble!

As the life expectancy in America increases, so does the length of retirement, which puts immense pressure on the Social Security fund

It makes it entirely possible that future beneficiaries are likely to receive a cut in payments at some point in the future.

3. Slow economic growth

Economic growth plays a vital role in ensuring the financial stability of Social Security. However, in recent years, the United States has experienced sluggish economic growth rates, which translates into fewer tax revenues flowing into the system. This only puts more financial strain on Social Security. 

And when coupled with the “not enough workers” problem and the fact that there are just way too many beneficiaries when compared to when it was created in the midst of the Great Depression: it makes paying it out an incredibly complex situation. 

4. Can’t grow its way out

While we talk about higher economic growth translating to higher net revenues, the Treasury Department has actually stated that they don’t believe that the United States can grow its way out of the problem. 

While it’ll definitely help the program, the Treasury Department pushed the idea that taking action now to reform the program will result in a gradual transition to something that’s actually more sustainable. 

Otherwise, it’s likely to reach its anticipated exhaustion date in 2035. Which is drawing ever closer since its initial prediction from before the pandemic … 

5. Political gridlock

Noticed the state of the political climate lately? It’s not playing kindly into the problems with Social Security at all. Political gridlock and partisan disagreements have now hindered all efforts to address the long-term solvency of Social Security.

The political gridlock is making it impossible for both sides to come to an agreement on a sustainable Social Security solution

We need both cooperation and compromise to ensure the program’s stability, two things that have proven increasingly difficult in recent years. 

Insider tips for navigating these troubled waters

1. Start saving early

One of the best things you can do to secure your financial future? Start saving early. Even if you’re decades away, even if you think you can navigate away around it, develop a habit of saving early to provide you with a solid financial foundation. 

2. Diversify your income sources

Social Security should not be your sole source of retirement income. And yes, we understand that feels a lot easier said than done. But you’d be surprised what a small side hustle can actually do for diversifying your income sources. Explore as many saving options as possible and look for unique ways to diversify your income. Even if it’s just selling your hobby-scarves for a few extra bucks on the internet – it all adds up in the end.

Be sure to diversify your income sources to assure financial stability in retirement

3. Stay informed

Social Security is always evolving so it’s important to stay up-to-date with any policy changes or updates. Find a news source you trust and enjoy, monitor it closely and regularly review your retirement plan. Remember, information is power, especially when navigating these troubled waters. 

4. Consider delaying retirement (or picking up a handy side hustle)

Delaying retirement can have significant financial benefits, and we know a lot of U.S. citizens are already turning to this solution. It increases the potential benefits and ensures you have some bonus time to save and invest. 

But here at Earn Money in Retirement, we don’t believe in grinding until you’re 70 after decades of burn out. You can easily opt for semi-retirement or phased retirement or even relocate to areas with low cost of living. If you’re looking for ways to earn money in retirement, we have a wide variety of articles with a bunch of ways to establish a useful side hustle, that are flexible, fun, and will give you a new lease on life. 

5. Advocate for change

The most important tip is to never underestimate the power of advocacy. Keep up with local and national policymakers and don’t be afraid to voice your opinion and concerns about the future of Social Security. You can also support local organizations that promote policies to enhance this program.

Don't forget to be involved in advocating for change, your voice really does matter when it comes to the overall scheme of things


Will Social Security disappear entirely in the future?

It’s unlikely that this will happen, however it will require significant reforms to ensure its long-term sustainability. 

Can I rely solely on Social Security for my retirement income?

Social Security is an essential safety net, but it’s best to try to find additional sources of income in retirement to ensure real financial security. If you’re looking for ideas? Peek these blogs!

All in all, the state of Social Security today is of increasing concern. It’s no surprise why Social Security is in such trouble. And that’s only a few of the bigger problems! There’s so many varying factors at play. It’s important to stay up-to-date with these policies and changes and, more importantly, be aware that the state of Social Security will have to change eventually. We hope our handful of tips and tricks helps put your mind at ease. But if you’re looking for more ways to secure your financial security in retirement and beyond? Explore our full list of useful blogs, tips and tricks here.