Dear Chuck,

I’m a recent college graduate with my first “real” job. With that comes paying into the Social Security System. My concern is whether or not there will be funds for me someday, especially in light of the recent deficit report.  

Worried Millennial

Dear Worried Millennial, 

First, I am impressed with a number of things about your question: first, that you are curious about the Social Security System and second, that you are aware of the out-of-control federal deficits. For far too many people, young and old alike, their contributions to social security are out of sight and out of mind. 

Will Social Security Go Broke? 

You’re hitting on a hot topic. Many fear that the money to fund America’s Social Security program will run out and a large portion of our population will be negatively affected. The money for this benefit comes from three sources:

• 88% from the Social Security tax
• 4% from income taxes recipients pay on their benefits
• 8% from interest on money in the trust funds

Some of the concerns voiced by people like you include:

The Funding Issue

Money raised by Social Security taxes is invested in non-marketable securities. These trust funds are projected to run out by around 2034. But, with the tax continuing to raise money, the program is projected to cover nearly 80% of its obligations through 2090. Despite the fact that the fund could be depleted by 2034-35, the program could still pay out what it takes in from Social Security taxes. This would pay an approximate 80% of the benefits for retired and disabled workers.

The Changing Population

Families are continuing to get smaller. Lower birth rates mean fewer people will be paying into the system. People are living longer than when the program was first started so they are collecting more money. This means more money will be needed for the program but fewer and fewer workers will be paying into the fund. 

 The American Association of Retired People (AARP), has addressed these concerns with a list of recommended solutions:  

 Some Proposed Solutions

• Raise the retirement age for people to begin receiving payments
• Increase or eliminate the payroll tax cap
• Increase the payroll tax rate
• Reduce benefits for higher earners
• Tax salary reduction plans like 401(k) plans and Flexible Spending Accounts
• Cover all newly hired government employees
• Increase the number of years to calculate initial benefits

Some of the AARP solutions would be helpful while I don’t agree with others. I don’t like trying to solve problems by increasing taxes. The private sector has proven to be far more efficient managing funds than the public sector. 

Many professionals do not consider the Social Security program to be in danger. It is deficit funded, surpassing the one trillion dollar mark in fiscal year 2019. And, those deficits are here to stay due to the government’s entitlement programs. Changes will certainly have to occur, but you should not worry that it won’t be there in the future when you reach retirement age. Here’s my take and advice.  

I believe you’ll get Social Security benefits. 

The government has a moral and legal obligation to pay out the benefits that have been paid in. It is highly unlikely that they would ever fail to make payments to those who have paid into the system. However, the value of what is paid out may be devalued and be far less helpful than it has been to past generations. 

Don’t rely on it.

Assume the responsibility for saving and investing yourself by living and planning as if Social Security will not be there. Prior to 1940, Americans did not receive Social Security benefits. President Roosevelt (FDR) signed the Social Security Act in 1935. The collection of taxes began in January, 1937, and monthly payments started three years later.

It is better to rely on the Lord and follow His precepts.  

“Wisdom is good with an inheritance, an advantage to those who see the sun. For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it.” (Ecclesiastes 7:11-12 ESV)

Live contrary to the way the government does.

Our government has low or no savings and excessive debts, but so do many Americans. This should be increased motivation for us to do the opposite. Do not run up unnecessary debt. This requires sacrifice and self-control.  

“Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.” (Romans 13:8 ESV)

“The rich rules over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7 ESV)

 Many people carry excessive credit card debt and find themselves trapped in a cycle of borrowing. If you are experiencing this burden, get in touch with our friends at Christian Credit Counselors. They have helped over 300,000 families experience freedom from their debts and can help you, too.

Do Not Fear.

We do not know what tomorrow holds. Therefore, don’t waste your time or emotions concerned about Social Security. Instead, live frugally, give generously, save regularly, and invest wisely. And, put your hope in the Lord, not man or government programs.

“Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” (Matthew 6:34 ESV)

 “Trust in the Lord with all your heart, and do not lean on your own understanding. In all your ways acknowledge him, and he will make straight your paths.” (Proverbs 3:5-6 ESV)

Congratulations!

It is exciting to be on your first real job. I hope it goes well for you. Live in such a way that whether social security is here for you or not, that you will be at peace. The Lord will be there to provide your needs in all circumstances.

Originally posted on the Christian Post, December 6th, 2019