I’m an Economist: The Real Threat to Social Security Isn’t What You’ve Been Told

When you read most headlines about how Social Security is imperiled, you might picture this vital program locked into a cruel game of William Tell, with the arrows of expanding lifespans and stock market chaos pointed at the apple on its head. There’s a lot of fear around the future of Social Security, to be sure, but economist Kathryn Ann Edwards believes people aren’t looking at the real culprit.

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Edwards emphasizes that, at the end of the day, regardless of the shots fired in a trade war or what happens in the market, your Social Security benefits are based on what you’ve paid into the system. She’s critical of what she views as fear-mongering about Social Security’s long-term viability.

Instead, she says, the biggest threat to Social Security is something most people have likely never considered: stagnant wage growth.

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Declining Wage Growth Is a Real Threat to Social Security

Edwards took to TikTok to explain her theory about the deeper issues undermining Social Security: decades of sluggish wage growth among American workers.

“People at the bottom of the wage distribution … have seen such anemic growth in their paychecks, [and that] is affecting Social Security’s bottom line,” she said. “You think of it as a benefit program, but it’s a wage program. Its finances are built on what Americans are earning. And if we go through multiple decades of most Americans not getting a decent pay raise, that matters more to Social Security than how long someone is living in retirement.”

Simply put, because Social Security’s funding is tied to payroll taxes — which are directly linked to earnings — lower wages puts significant strain on the system’s financial health.

Edwards wants people to shift their focus: rather than being fearful that Social Security will “run out” because people are living longer or because the trust fund balance is falling, they should instead direct their anxiety — and calls for action — to the problem of wage stagnation.

At Its Core, Social Security Is More Stable Than You Think

Many Americans imagine Social Security as a fragile net, always on the verge of fraying and dropping them into financial ruin. But Edwards urges people to take a deep breath. Social Security was designed to be insulated from the stock market’s twists and turns — and even from economic downturns.

“Your benefit is something that you paid for. It’s protection for the rest of your life [so] that if there is some risk to your retirement security, you have a basic level of insurance that comes from Social Security,” said Edwards. “So, it doesn’t go down during recessions. Your benefit is based only on your wage and what you put into the program.”

Even if the economy tanks, the market crashes or a trade war disrupts global supply chains, your benefit doesn’t change. In these uncertain times, Social Security serves as a rare constant — a dependable support structure for millions of retirees.

Congress, Not Social Security, Bears the Blame

As Edwards explains, the Social Security Administration has been fully transparent with Congress about its projected shortfalls — offering a 45-year heads up and subsequent warnings throughout the 1990s.

“It started to notice in its 75-year projections that there was a gap — that in the outer years of the program … that there was not going to be enough tax revenue relative to promised benefits. Over time, this gap was cemented. They could see it coming,” she said. “The first 20 years after they made that warning, they collected more in taxes than they paid out in benefits. They took in money hand over fist until the Great Recession. In the Great Recession, they dipped into the multimillion-dollar trust fund … that will last a quarter of a century.”

Each year, the Social Security trustees submit a report to Congress outlining the long-term financial outlook of the program and providing a full menu of policy options to address any shortfall. Yet instead of acting, Congress has allowed the problem to fester. Somehow, Edwards says, this straightforward and sensible financial warning has been twisted into a misleading narrative: that Social Security is “running out of money.”

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“You need to ask yourself, who benefits from convincing you that you don’t deserve a program that is 90 years old and has never missed a benefit?” Edwards says. “It is on Congress. In four decades of inaction, they are the problem — not Social Security.”

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This article originally appeared on GOBankingRates.com: I’m an Economist: The Real Threat to Social Security Isn’t What You’ve Been Told