Worried Social Security Will Run Out of Money? Here's Why It Can't.

Social Security has been in the news quite a bit since the start of the year. Part of that stems from the fact that changes are happening at the Social Security Administration in the wake of the Department of Government Efficiency's involvement.

There's also been a change to the program thanks to the Social Security Fairness Act. Now, beneficiaries who previously lost out on Social Security because of the Windfall Elimination Provision and the Government Pension Offset could see their monthly benefits increase.

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But while you may be reading your fair share of Social Security updates these days, you might also come across tales of the program's impending demise. A lot of people are convinced, and have been for years, that Social Security will soon run out of money and stop paying benefits completely. But it's important to get to the bottom of what's really happening with Social Security.

Why Social Security can't run out of money

If you were to do an internet search of the terms "Social Security" and "bankrupt," you'd probably get a good number of hits. But it's important not to buy into rumors that Social Security is going broke, because that simply can't happen.

Social Security gets most of its funding from payroll taxes. That means that as long as people continue to work and pay taxes on their income, Social Security can continue to exist. It also means that there's absolutely no reason to assume that you won't get any Social Security once you retire, even if you're young or brand-new to the workforce.

What's really going on with Social Security

Although Social Security is not running out of money, the truth is that the program could be looking at benefit cuts in about a decade from now. The reason is that while Social Security still anticipates payroll tax revenue, in the coming years, it expects that revenue stream to shrink as baby boomers retire in droves.

It's true that as older workers retire, younger ones will enter the workforce. But the problem is that existing workers won't be replaced at a fast enough pace for Social Security to keep up with its financial obligations.

Social Security can tap its trust funds to keep up with benefits until they run dry. And while the program itself can't run out of money, those trust funds are a different story.

Recent projections say that Social Security's trust funds will be empty by 2035. At that point, the program may have to implement benefit cuts. And that's not a rumor -- it's something the Social Security Trustees have been talking about for years.

So where does that leave you? Well, if you were convinced that Social Security was on the verge of bankruptcy, this might read like good news. But either way, it's a good idea to gear up for benefit cuts and boost your retirement savings to the best of your ability to make up for them.

To be clear, Social Security cuts are not a given. And lawmakers have workarounds they can try to prevent them from happening. But it's best to keep the possibility of cuts in the back of your mind.

You don't, however, have to stress out about Social Security going away completely, since that's not in any way what's happening. And being able to count on the program for some retirement income could give you some much-needed peace of mind.

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