A new brief by the Center for Retirement Research at Boston College explains the argument against the idea that Social Security’s funds will fall apart in 10 years—noting that its future isn’t as bleak as widely anticipated by the public.
The brief explains why Americans tend to believe that once Social Security reserves are depleted, benefits will soon be eliminated afterwards. Ultimately, the behavior boils down to how Social Security finances are presented and communicated to them through the media.
“The finances are complex, and the average person has a tough time translating what they hear in the dire media reports about trust fund depletion into what that means for benefits,” writes Kimberly Blanton, author of the brief. “Sensational headlines about the program’s future ‘insolvency’ or ‘bankruptcy’ don’t help.”
Images or graphics on shrinking balances can further spiral participants into believing that Social Security funds will cease to exist one day. A survey by the National Bureau of Economic Research in 2022 presented participants with two graphs. The first one shows the balance of the trust fund’s reserves between 1994 and 2034, specifically showing that trust funds peaked in 2020 and are expected to decline year-over-year until full depletion in 2034.
The second graph paints a different picture—tax revenues and benefits paid are exemplified through two distinct lines, with tax revenues eventually failing to meet the amount of benefits paid. Specifically, the graph shows that there is not enough revenue being brought into the trust fund to match the number of benefits that are currently being paid out.
The survey found that participants who viewed the first graph had an inaccurate outlook of Social Security’s finances driven by how the information was portrayed. Two out of three people said the program would “no longer be able to pay out benefits” after depletion.
In comparison, this number dropped to nearly 56% for those who saw the second graph.
Ultimately, proper education surrounding the state of Social Security’s finances will be needed to slow the misinformation. In a follow-up study, NBER researchers polled respondents on the previous charts. This time, however, they prompted participants with two questions: Would the payroll taxes continue after the trust fund depletes? And, what would Social Security do with those revenues?
Forty-three percent of participants who saw the second chart responded that Social Security would stop paying out benefits, down from the previous 56%. It’s a welcomed improvement, notes the CRR, but an signal that proper education on Social Security finances is still needed among the public.
“But the researchers, by making clear that payroll taxes would continue, have uncovered a promising way to tackle a common misunderstanding that Social Security benefits will dry up,” the CRR concluded.
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