Seniors Expect to Run Out of Money as Social Security Drop Forecast

Economists predict that Social Security will be insolvent by 2033, so many seniors expect to run out of money within a decade.

According to a new study from MassMutual, 40 percent of people nearing retirement say their Social Security benefits will be their biggest source of income in retirement. Despite this, more than a third of them say their retirement income will not be enough to last them for more than 10 years.

“Seniors and those approaching their golden years are a little worried about whether they will have enough money to survive retirement,” said Nadia Vanderhall, a financial planner at The Brand & Band Strategy Group. It’s starting to happen,” he said. Newsweek. “Americans are living longer while prices are getting higher, even though they can live longer than 30 years in retirement.”

The data comes as economists predict that Social Security will collapse by 2033 if nothing changes. As more baby boomers retire and fewer young people join the workforce, the Social Security program expects benefits to dry up. Starting in 2033, benefits could be cut by 23% without major program changes.

To save on benefits, politicians have proposed raising the retirement age, increasing payroll taxes, and changing the way benefits are calculated. So far, none of the strategies have been approved, leaving future benefits up in the air, especially if young people are paying for them.

The Federation of Senior Citizens predicted that the cost-of-living adjustment in 2025 would be only 1.75%, down significantly from increases of 3.2% and 8.7% in 2024 and 2023.

Vanderhoal said there are growing concerns about what will happen when Social Security runs out, and that the system will undergo many changes in the coming years, especially as cost-of-living adjustments have not kept up with the inflation Americans are currently facing. He said there is a high possibility that he will go through the process. .

If nothing changes, many elderly people will struggle to make ends meet and find themselves in dire straits.

“We’re going to see more retirees find they have to come out of retirement and go back into the workforce or homelessness,” Vanderhall said.

According to the 2023 PIT count, a total of 138,098 adults age 55 and older were homeless overnight in the United States. And that number is expected to triple by 2030 as more baby boomers retire without adequate benefits.

Still, some financial experts caution soon-to-be retirees against becoming too fatalistic about their future retirement.

Financial expert Michael Ryan, who runs michaelryanmoney.com, wants to ease seniors’ fears about bankruptcy expected in 2033.

“It’s important to understand that bankruptcy doesn’t mean your benefits stop or you stop receiving checks,” Ryan said. newsweek. “This means that there is still enough ongoing payroll tax revenue to pay about 76% of scheduled benefits. Therefore, retirements that currently collect $2,000 per month in Social Security income “They would still be collecting checks in 2033. In that doomsday scenario, they could still expect to receive more than $1,500 a month from Social Security going forward.”

As the MassMutual survey showed, many seniors don’t have enough saved for retirement, but bankruptcy doesn’t necessarily raise their concerns all that much.

“Many baby boomers haven’t yet saved much money and are likely to fall into poverty,” said Patrick Misch, CEO of SilverStay, a lifestyle support platform. Newsweek. “It’s hard to make ends meet living on Social Security income alone.”

For people who need assisted living services in addition to daily necessities, the cost can easily exceed $2,000 a month, Misch said.

Despite these economic realities, Ryan remains hopeful that the Social Security program will be modified to maintain benefits in the coming years.

“Lawmakers have many tools to strengthen Social Security by 2033 without suddenly cutting benefits,” Ryan said. “For people who are already retired, their Social Security income will not be affected by future changes.

“Securing Social Security for decades to come will require bipartisan cooperation to implement small incremental changes.”