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The release of the 2025 Social Security Trustees Report led to lots of hyperventilating in the media as well as dire warnings about the program facing insolvency. While people can earn a good living pushing scare stories on Social Security, they have little basis in reality.

To be clear, the most recent trustees report does show the program facing a shortfall so that in nine years it will not be able to pay full scheduled benefits. But it is important to get a clear picture of what this means.

First, let’s look at the numbers on their face. Under current law, the government cannot pay out benefits if the money is not in the Social Security trust fund. The projections show that in 2034, after the bonds held by the trust fund have been sold off, the program will have enough money to pay 82 percent of scheduled benefits.

While a benefit cut of 18 percent would be a terrible thing for most beneficiaries, 82 percent is still very far from zero. So, the idea that the program will just go away is a complete invention. Congress can vote it out of existence, but that doesn’t seem very likely given the share of the population that either are currently beneficiaries or expect to be getting benefits in the near future.

Another point about these numbers that deserves to be attacked head on is the idea that Social Security in its current structure is a major cause of generational inequality. While the retirement of the baby boom cohorts substantially reduced the ratio of workers to retirees, there is little change projected in later years in this century. This means that the share of scheduled benefits that could be paid, absent any action from Congress, falls only modestly in subsequent decades.

Going out to 2065, when today’s 25 year-olds will be turning 65, the program is projected to be able to pay 74 percent of scheduled benefits. This would mean that if Congress never touches the program and the projections prove correct, a lifetime medium earner would get a benefit of $30,900 in 2065, more than 20 percent higher than the $25,200 a medium earner would get retiring today (all numbers are in 2025 dollars). Where’s the generational inequality?

The fuller picture would be somewhat more complicated. We expect a retiree’s income to bear some relationship to their income while working. The benefit the program would be able to pay in 2065, absent any changes, would be a lower share of lifetime earnings than is the case today. But then again, why are workers in the next forty years expected to have higher lifetime earnings? It’s because we have given them a larger capital stock and........

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