Social Security was established during the Great Depression to provide economic security to vulnerable Americans. Today, this federal program supports about 70 million beneficiaries per year, including retirees, disabled workers, surviving spouses, and dependents. However, the program is expected to face a funding shortage in the next decade if it is not fortified.

Statistics show that an automatic 20% benefit cut for beneficiaries could start in 2034 when the trust fund reserves for Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) are depleted—unless the U.S. government intervenes. Since 2010, Social Security has paid out more in benefits and expenses than it has collected in taxes and other non-interest income, indicating a future financial shortfall.

Demographically, the ratio of covered workers to beneficiaries has dwindled from 4.0 in 1965 to 2.7 today, with 2.3 projected for two decades from now. Several options to bridge the income-cost gap for Social Security are being considered, such as hiking the payroll tax rate, cutting benefits for high earners, eliminating the taxable maximum, and raising retirement age among others.

Contrary to fears, while the foundation of Social Security needs strengthening, retirees can still anticipate receiving 80% of their benefits for many years. Therefore, benefits won’t abruptly cease, neither will the program go completely bankrupt. Even so, there are strategies you can implement to avert any potential impacts on your financial security, such as curbing expenditure, increasing your saving rate, settling expensive debts, maintaining diverse investments, and contemplating methods to prolong your working period.

For more detailed information about Social Security, understanding benefits and ways to navigate potential reform, consider contacting the California Employment Development Department (EDD). Their customer service representatives are equipped to answer queries and provide you with relevant guidance. Visit eddcaller.com to learn more about how to get a hold of edd.