---
title: The Shaky State of Social Security
description: For years we’ve understood that Social Security will not look the same in the future as it did in the past. Future recipients won’t be able to completely rely on their benefits to cover their living costs, much less their healthcare costs. So what should you know about the hazy future of social security?
image: https://www.letsassemble.com/hubfs/blog-files/The%20Uncertain%20Future%20of%20Social%20Security%20Benefits.png
---

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# The Shaky State of Social Security

Posted by [ Gabriel Burczyk | Founder & CEO](https://www.letsassemble.com/wealth-management-blog/author/gabriel-burczyk)  
 July 4, 2018

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![The Uncertain Future of Social Security Benefits](https://www.letsassemble.com/hs-fs/hubfs/blog-files/The%20Uncertain%20Future%20of%20Social%20Security%20Benefits.png?width=404&name=The%20Uncertain%20Future%20of%20Social%20Security%20Benefits.png)If there’s a good word to describe the state of Social Security in America, it might be something like “uncertain.” And that’s a far cry from the *reliable*, *dependable* safety net that many retirees and future retirees have come to expect of the program.

Many readers probably know where this is going – the familiar narrative that Social Security is underfunded, may run out of money soon, and may not be there for future generations. Even still, as the checks continue rolling in, the idea that Social Security is in trouble has a feeling of being far-fetched. For many, it feels like an issue that may indeed be true but doesn’t necessarily apply to you specifically.

First signed into effect by President Roosevelt on August 14, 1935, the Social Security Act created a social insurance program designed to pay retired workers over the age of 65 continuing income after retirement. Since then, tens of millions of people have received benefits through the Social Security Act. Yet, the program was wrought with challenges from the start, and experienced financial peril as early as 1977.¹

And, despite attempts to keep it solvent, the Social Security program faces a major long-term shortfall. Surprisingly though, a large number of Americans seem unaware of this looming failure.

Indeed, according to recent survey by Nationwide, a quarter of people age 50 and over – with household incomes of at least $150,000 – think they can live comfortably on only Social Security once they stop working.² But the reality of the situation is that those Social Security payments almost certainly won’t be enough to cover living expenses, and data suggests it may not even come close.

## The Social Security Dilemma: As Benefits Fall, Costs Continue to Rise

In the Social Security and Medicare annual 2018 report, it was revealed that Social Security’s costs *exceeded* its payroll income plus interest, meaning that the program must now start drawing down principal from its trust fund. The trustees who wrote the report estimate that **the combined trust funds for Social Security will run dry by the year 2034**. If that happens, Social Security will only be able to pay about 79% of promised benefits to retirees and disabled beneficiaries.³

Even as social security benefits may be poised to fall, living costs for retirees continue to rise. Medical costs, for example, tend to rise at around 5% to 6% a year.² That means that an increasing share of Social Security benefits may end up going straight to healthcare, leaving less and less for other everyday living expenses.

According to a research report by HealthView Services, an average 66-year-old couple retiring in 2017 will require 59% of their Social Security benefits to cover their total health care costs in retirement. For younger workers, the numbers are far worse: a 55-year-old couple retiring at 66 will need 92% of their benefits to pay lifetime medical costs, and a 45-year-old couple will need a staggering 122% of their Social Security benefits to cover their retirement health care needs.³  

If there are any other life expenses outside of healthcare – which of course there are – then that means the money must come from somewhere else. 

## The Bottom Line for Retirees…And Anybody Who Wants to Retire in the Future

Investors and retirees should focus on what they can actually control – how much you save, how you invest, how you plan for your retirement income needs. Who knows how legislators will deal with the Social Security issue in the future, or if they will address the problem at all.

In all likelihood, Social Security won’t outright go away – but it also probably won’t go back to the way it was, when it covered a larger percentage of retirement living expenses.

As we move forward into the future, it will become more important for investors to chart their own course, rely on their own savings. And that means putting a savings and investment plan in place as soon as possible.

WrapManager can help. As a starting point, we work with our clients to understand what they want retirement to look like, and we get to work building an investment plan that accounts for their goals and also sets realistic benchmarks for how to get there. At the end of the day, we can help you build a blueprint for retirement that will help you know where you stand and what needs to be done at each step along the way. Let us build an investment plan for you today. Call 1-800-541-7774 or send an email to [wealth@wrapmanager.com](mailto:wealth@wrapmanager.com) to get started.

 

**Sources**

¹[History.com](http://www.history.com/topics/social-security-act)

²[Time Money](http://time.com/money/5253058/how-much-social-security-covers/) 

³[CNN Money](https://www.cnn.com/2018/06/05/politics/social-security-benefit-cuts/index.html) 

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