Social Security is Not Going Away, But It Will Become Worthless

Inflation is the ally of political extremism, the antithesis of order.

Adam Ferguson

When Money Dies

According to a recent government report, Social Security’s trust funds will be entirely depleted by 2034, just nine years from now. What does that mean?

Anil Suri, a Merril Lynch analyst, said that Social Security’s predicted insolvency doesn’t mean the government will stop issuing Social Security checks. However, recipients could see their benefits decreased by 20 percent.

This is bad news for retired or soon-to-be-retired Americans. Approximately 40 percent of older Americans rely on their Social Security checks for almost all of their income. A 20 percent cut in benefits would be disastrous for these people–plunging them into poverty. Indeed, most retired Americans rely on their Social Security checks to help meet basic expenses, even if they have other sources of income.

I am 76 and receive monthly Social Security checks, but I’m not worried about a possible benefit reduction. Why?

First, there are several things Congress can do to shore up the Social Security trust fund, such as raising the age for full benefits or increasing payroll contributions for people who are in the workforce. I’m confident that Congress will take action to stabilize the Social Security trust fund.

Moreover, it’s politically impossible for Congress to reduce Social Security benefits because so many Americans depend on them. Everyone recognizes that Social Security is the third rail in national politics. There are lots of budget items that will be slashed before Social Security benefits are cut.

Slashed benefits don’t concern. What worries me is inflation.

The Federal government’s national debt is $36 trillion, and interest on that debt is almost $1 trillion annually. Congress isn’t even trying to balance the budget. Indeed, it will probably authorize an increased deficit as part of the Big Beautiful Bill.

Our government has financed our unbalanced budget with treasury bonds at reasonably low interest rates. The U.S. dollar is the world’s reserve currency, and the United States has historically been regarded as a safe place to park money.

If the world loses confidence in the dollar, interest rates on treasury bonds will go up–perhaps dramatically. Inflation will rear its ugly head, and the dollar’s buying power will shrink.

George Will wrote recently that the national debt makes a fiscal crisis inevitable. I agree.

That’s what scares me: not a smaller Social Security check but a worthless check due to inflation. If inflation gets out of control, millions of Americans will suffer, especially older Americans whose Social Security checks are their sole source of income.