What Happens When Social Security Runs Out? Major Concern | How much will SSI get in 2022

What Happens When Social Security Runs Out? Major Concern | How much will SSI get in 2022

What happens when Social Security runs out? This is a major concern of millions of beneficiaries who rely on these monthly benefits. Let's get into it and discuss the process and what they are currently doing right now to avert this type of issue, but really quickly. Thank you so much for reading. If you're new here or if you haven't done so yet, I'm here for you each and every day with all of the latest updates and my commitment and dedication to you and this community as a whole is to be here every single day to help out in any way that I possibly can.

So again, thank you so much for visiting subscribe down below with mail, and let's get into this right away. All right. So you've probably been hearing this for many, many years. Social Security is bankrupt. Social Security benefits are ending. Right. I'm guessing you've probably heard these statements for a very long time now. In fact, I remember hearing those statements when I was a little kid, and that was decades and decades ago. So either way, these statements have been around for a very long time. However, as a result of 2020 and about the first half of 2021, we're starting to see some of the effects of everything going on on the Social Security trust fund.

Not only that, as a result of some recent reports that I've been seeing, we're also talking about this massive 5.9% cost of living adjustment for 2022 and how that could actually deplete the Social Security trust funds even earlier than projected. So what does all of this mean? What does it mean if Social Security runs out? Does that mean that benefits are going to be ending, like snap our fingers and, oh, my gosh, benefits have ended? I don't know what to do anymore.

Well, this is actually kind of scary, but before we get too worried about this whole thing, let's actually talk about this process a little bit more because there's more we need to understand about all this now. I also want to talk about a couple of other quick reports and things that we've seen going on out there right now. So according to a couple of reports that I've seen 40% of Social Security beneficiaries say that their monthly benefit accounts for 90 or more percent of their benefit and their income for the month.

So just imagine that 40% or more of the people drawing on Social Security are actually relying on their benefit as 90% of their monthly income. That's big. In other words, if these benefits were to just end automatically or just end spontaneously, that would be detrimental for a large percentage of people. Right. Not only that, I'm sure you've seen this before as well. 10,000 people are becoming eligible for Social Security every single day. Yeah.

Baby boomers are turning the age where they can start drawing on Social Security, and 10,000 people, on average every single day are becoming eligible for Social Security. That's massive. Seriously, that is huge. Right. So what does all of this mean for the Social Security trust funds and the solvency of the program?

What does it mean going forward for all of these tens of millions of beneficiaries? These are some big numbers we're dealing with. In fact, just over the next few years, over the next ten years or so, there's going to be a massive, like 80 million people drawing on Social Security retirement, disability survivors benefits. As of right now, there are about 70 million drawings right now. So, I mean, we're going to knock this thing up by millions more people over not that many more years a lot.

Right. So what does all this mean for Social Security? And what does it mean when we talk about Social Security running out? All right. So here's what we know right now.

First off, as a result of the recent reports, they're talking about the trust funds for Social Security, the old-age trust fund. Remember that one? That's what they refer to it as of the end of 2020, which had $2.9 trillion in the trust fund. A lot of money, right. $2.9 trillion.

So we think, okay, that's a lot of money that's going to last a very long time. Well, according to the recent reports, they're saying that this is only going to last until 2033, possibly even earlier as a result of these massive Cola raises that are being established right now for 2022 and possibly even another big one coming for 2023. So they're talking maybe even shaving another year off of that. That's not that far out into the future. However, it is still a long time from now, right over ten years away.

I get it. It's a very long time. However, we all know time goes very fast. Right. And especially the more people that start drawing on these benefits, the faster it's going to draw down those trust funds.

So one thing that they are currently working on right here right now is to actually implement this Social Security 2100, a sacred trust. We've talked about that before in previous videos in quite a bit of detail. But essentially one thing that they want to do there as well as raise the Social Security tax, in other words, like raise that limit on there because right now, people who earn up to basically just under $150,000, anything over that they pretty much don't pay any taxes into Social Security. So basically they want to lift that limit way up.

So anybody who earns income over about $150,000, roughly, it's a little bit less than that. But roughly $150, they'd be paying taxes on that into Social Security, which would ultimately help build up the Social Security trust fund, more money coming into the system that needs to go back out the door for the beneficiaries. Right. So more taxpayer dollars coming in so that they can still continue to stay solvent. However, that's one strategy within the Social Security 1100 a sacred trust. Also, by the way, that was introduced by John Larson in Congress.

However, what does it mean if Social Security actually does run out, as in the trust fund becomes completely depleted? What happens then means all of our benefits are ending. Right? Just totally done. We are all done. Game over. Well, it's all fend for yourself, then. Right. Well, no, not exactly. That is actually not how it's going to work.

So I know that that is what many people think, but that's actually not true. Okay, so let's actually walk through this a little bit further now. So if the trust fund actually does become depleted here's, what would happen is they would actually take the incoming money from taxes like the Social Security payroll taxes that are being paid in by the taxpayers, because, remember, as a worker, as you're paying in through your paychecks, things like that, you look on your pay stub, and there's something in there from Social Security, right?

They take out quite a bit of money, right. Each and every paycheck. Well, that money goes into the Social Security trust fund to help build up the trust fund. However, what they would actually do is rather than drawing on the trust fund because it's empty. If that were the case, they would actually take the money coming in the door from Social Security payroll taxes, and they basically just push it right out the door again to Beneficiaries. However, there's one major catch, and that is based on the current rate of payroll funds coming in right now, the money collected from Social Security taxes by payrolls as a result, right now, they would only be able to pay out about 78% of promised benefits.

Let me give you a quick illustration of what that looks like.

Let's just say right now you are receiving $1,000 as a monthly benefit. If they can only pay 78% of your benefit, that would mean you would only get $780 on your $1,000 benefit that you've earned over your whole life. Right? You've earned your Social Security benefit, so that would not be a good situation. So that's what it would actually mean if the trust fund does become depleted and they no longer have money in there, what they would continue doing is still paying benefits, but it would be at about $0.78 on the dollar.

So for every $1 that you should be getting, you'd be getting about $78. Does that make sense? Not a good thing about a 22% haircut on benefits as a result of this, which is why they continue saying we've got to raise taxes here. We've got to bring in more revenue into the Social Security trust fund to keep this thing afloat because at this rate, it's being drawn down faster than money is coming in. Let me give you a quick example of what this looks like let's just say you have a bank account.

Okay? You have $1,000 in the bank account. Every week, you add another $100 into the bank account. However, every week you're drawing down $120, you get what I'm saying. It's like a slow, slow leak out the bottom of the account. So you got $1,000 sitting in there. $100 is coming in every month, but $120 is going out. So-net net. You're losing $20 every single month. Right. So of course, we're talking about Social Security. We're talking much, much bigger numbers than this. But that's just a quick illustration of what this actually looks like. Right? It's a very slow leak.

And over long periods of time, it's going to slowly leak that thing down, and eventually, it'll be empty. Right. So the same thing with the savings account or the checking account, like, I just gave you an example. The $1,000 eventually over a long period of time. Over many weeks, it'll eventually be drawn down because on a net basis, week over week, it's being drawn down by an extra 20 over what's actually being brought in.

So does that make sense? So that's what it means when Social Security runs out. So as of right now, it looks like this is probably going to happen around 2033. Now, again, I'm probably going to see some comments down below saying, Why are you even talking about this? It's way out in 2033.

I get it. It's over ten years away. However, we want to talk about this simply because number one, I've seen it in the headlines a number of times lately. Number two, we need to stay aware of what is actually going on. If over 40% of beneficiaries rely on their Social Security benefit as 90% of their income.

I don't know seems to me like this is something we certainly want to pay attention to because if uh 40 or 40 or more percent of people all of a sudden have their income dropped by 22 well what would that do to people that would not be a good situation especially right now as we need probably a 22 boost to benefits I mean let's be real we need far more than that but I'm just giving that number based on the 22 haircuts that we could potentially be looking at right so that would that's the opposite direction that benefits need to be going right now.

benefits need to be raised by multiple percentage points not dropped by 22 percentage points right kind of get what I'm saying here so anyway this is what it would look like if social security ran out it's not like benefits would end one day no that's not what would happen but rather they would be reduced as a result of social security only being able to pay out what they are actually bringing in through tax revenues however social security and this um well especially this social security 2100 a sacred trust that is one of the ways that they want to kind of give more solvency to this program and ultimately raise more tax revenues as well as enhance the benefits for all these millions of beneficiaries there's a lot of good stuff in there as well by the way if you want to see that article feel free to scroll back you can check it out um I do have a couple article here specifically talking about social security 2100.

so anyway I hope this helps you out a little bit better understand what it actually means if social security actually runs out right I know it's kind of scary when we see the headlines talking about social security there it's over right benefits are ending well no they're not ending they may just be reduced at some point over 10 years from now.

if that's the case right so anyway hope this helps you out again I'm here to help you out in any way.