I usually have a good sixth sense of what's weighing on investors' minds.
Part of that intuition stems from the number of questions we get from clients during our frequent meetings. At the top of the list over these last few months, besides tariffs, there have been concerns as to what in the world is going on with Social Security.
Questions like: Is my social security check going to be cut or, worse yet, stopped? My younger clients wonder if they'll ever see any of their benefits despite their decades-long contributions to Social Security.
Factor in the rumors flying around as to what's happening, and it's enough to make someone go batty. Your friends, neighbors, family members, and mainstream media all have their thoughts on what will happen to Social Security. Of course, most of those thoughts are steeped in political bias.
Let's look at the information that comes directly from the Social Security office, rather than rely on political bias, rumors, and innuendos, to get some answers to burning questions and help dispel some of the myths.
Myth #1:Social Security is cutting staff by 50%.
From the Source: Social Security is reducing its workforce, but not by anything close to 50%. They have stated that they are reducing their total workforce from 57,000 to 50,000, with the goal of these reductions being to eliminate redundancies and non-mission-critical work efforts. Most of the reductions are expected to be accomplished through retirements and voluntary separations. (SSA Article)
Myth #2:Good Luck getting an appointment because they are closing all the field offices.
From the Source: As of this writing, Social Security has not announced the closure of any local field offices. This misunderstanding may be a result of the announced restructuring plan in which SSA stated that it is reducing its regional offices from ten to four. (SSA Article #1, SSA Article #2)
Myth #3:Good Luck getting someone on the phone because they are eliminating phone services.
From the Source: At this time, all telephone-related services remain available in their historical form with one exception: The only change is that SSA will now require online or in-person identity verification when making changes to direct deposit information. According to SSA, approximately 40% of Social Security direct deposit fraud is associated with someone calling SSA to change direct deposit information, so this new requirement is intended to protect beneficiaries and ensure the integrity of the program. (SSA Article).
A side note here – There have been reports of longer wait times for both telephone and in-service appointments, to which I would ask the rhetorical question: When has the Social Security Administration EVER been a model of quick service? You're more likely to see a one-legged unicorn with two horns than you are to see speedy service within the SSA. Secondly, haven't services generally been slower across the board since COVID-19?
Myth #4:The Social Security system is going bankrupt, and benefits will be lost.
From the Source: According to the most recent (2024) “Social Security Trustees Report,” Social Security can pay full benefits through 2035, at which point, the famed Social Security trust fund would be depleted. Beyond that time, assuming Congress takes no further action to remedy this issue, the SSA would initially still be able to pay about 83% of all scheduled benefits, despite the depleted trust fund. This is because Social Security is mostly a “pay-as-you-go” system. Obviously, this potential outcome is not ideal, but it’s far from the doomsday scenario of $0 benefits payable to beneficiaries that some recipients seem to believe is inevitable.
Furthermore, the calculated changes that would be required to bring Social Security back to full funding status through about 2098 are currently manageable.
Admittedly, getting our bureaucrats and politicians to make these changes may seem like a tall order. But given the incredible importance of the Social Security program to millions of Americans, I’d like to think that the voices of the masses will grow loud enough to get Congress to shore up what I believe is one of the best-run public pension programs in the world. (Sources: SSA Report; Summary of Report: Center on Budget and Policy Priorities)
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While these are not the only myths that have circulated since the election, they seem to be more on investors' minds than others.
I have no earthly idea how the Social Security system will right the ship; I happen to believe that it WILL eventually develop strategies to cover any potential shortfall.
However, I suspect that politicians, being politicians, will wait until the last possible second to pass the necessary legislation (maybe 11:45 p.m. on December 31st, 2034?) because, like it or hate it, this is how our political system works. Kicking the can down the road is what politicians do VERY well.
Stay the course, my friends.