Social Security trust funds are running low. Here’s what you should know

The following is an excerpt from “This Week, Your Wallet,” an audio program produced by CNBC Personal Finance Team. Listen to the latest episode Here.

Social security is that biggest Federal program in the US The vast majority of older Americans receive Social Security benefits, which either partially or even fully fund their retirement income.

Nevertheless, the program faces solvency problems.

“Their overall health impacts virtually every American,” said David Blanchett, head of retirement research at PGIM, the wealth management division of Prudential Financial.

Here are four takeaways from a recent conversation with Blanchett about the future of Social Security; Doug Boneparth, certified financial planner and founder of Bone Fide Wealth in New York; and CNBC personal finance reporter Lorie Konish.

1. Social Security is “America’s Retirement Safety Net”

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Social Security is “America’s retirement safety net,” Blanchett said.

“It’s really hard to underestimate its importance, especially when it comes to securing income in retirement,” he added.

The average pension in June was $1,837 per month.

Approximately 67 million Americans receive a Social Security check each month. Most, but not all, are retirees – disabled workers, surviving spouses and dependents are among the others who are eligible.

2. Demographic developments are putting a strain on the program’s finances

Social Security finances are under pressure.

Beneficiaries live longer, which means the program spreads payments to recipients over a longer period of time. And about 10,000 baby boomers are retiring daily. The proportion of workers paying into the system (through payroll taxes) has declined relative to the number of beneficiaries, creating an imbalance.

As a result, the Old Age and Survivors Insurance Trust Fund, which supports Social Security benefits for retirees, went into effect without legislative action estimated dry up in 2033.

3. Social Security will not go away, but cuts may occur

Why Social Security Won't Run Out

When the trust fund is depleted, that doesn’t mean the benefits are gone. Workers would continue to pay Social Security taxes and the funds raised would continue to be paid out to retirees.

However, there would be cuts – about 77% of promised benefits would be payable if the trust fund were depleted, according to the SSA.

4. There will be “losers”. Social Security trust funds are running low. Here’s what you should know

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