Americans Misunderstand Social Security's Future Finances

New research shows most believe benefits will stop entirely when trust funds run out, but payroll taxes will keep funding 75-80% of scheduled benefits.

Mar. 25, 2026 at 3:42am

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A new study from researchers at the Cornell SC Johnson College of Business reveals that most Americans misinterpret what will happen when Social Security's trust funds are projected to run out by 2035. Nearly two-thirds of people believe benefits will stop entirely after depletion, but the reality is that payroll taxes will keep flowing in and Social Security could still pay about 75% to 80% of scheduled benefits even if Congress does nothing.

Why it matters

This misunderstanding can shape retirement planning and public opinion, as people may claim Social Security benefits early, use their savings more aggressively, or support drastic policy changes if they believe benefits will vanish. Understanding the distinction between the trust fund balance and ongoing payroll tax revenue is crucial for retirees, policymakers, and anyone planning for the future.

The details

The researchers call this error "inflow neglect" - a mental shortcut where people focus on the shrinking trust fund balance and ignore the fact that payroll tax revenue will continue to flow in. In experiments with thousands of participants, the researchers found that simple changes like displaying graphs of income and costs instead of just the trust fund balance, or asking people to reflect on whether payroll taxes will continue, dramatically reduced this misunderstanding. Even in an unrelated scenario about a company running out of inventory, many participants assumed shipments would stop when stock hit zero, unless they were reminded that production would continue.

  • Social Security's trust funds are projected to run out by 2035.
  • Costs have exceeded income since 2021, causing the trust fund cushion to shrink.

The players

Suzanne Shu

The John S. Dyson Professor in Marketing at the Charles H. Dyson School of Applied Economics and Management at Cornell University.

Stephen Spiller

Co-author of the study and professor at the Anderson School of Management at the University of California, Los Angeles.

Hal Hershfield

Co-author of the study and professor at the Anderson School of Management at the University of California, Los Angeles.

Megan Weber

Doctoral student and co-author of the study at the Anderson School of Management at the University of California, Los Angeles.

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What they’re saying

“When people see charts or headlines focused on the shrinking trust fund balance, nearly two-thirds believe benefits will stop entirely after depletion. But the reality is that payroll taxes will keep flowing in, and Social Security could still pay about 75% to 80% of scheduled benefits even if Congress does nothing.”

— Suzanne Shu, John S. Dyson Professor in Marketing

“Our research shows that this framing matters. When participants saw a graph of the trust fund balance dropping to zero, 64% assumed benefits would disappear. When they saw a graph of income and costs - the flows - only 56% made that mistake. And when asked to think about whether payroll taxes would continue, the error rate plunged to about 40%.”

— Suzanne Shu, John S. Dyson Professor in Marketing

What’s next

The researchers suggest that government reports often emphasize the trust fund balance, which can make the depletion date of 2035 feel like a cliff edge. They recommend focusing more on the ongoing inflows from payroll taxes to help the public better understand that benefits would shrink, not disappear, after trust fund depletion.

The takeaway

This study highlights a critical misunderstanding about Social Security's finances that can have significant implications for retirement planning and public policy. By recognizing that payroll tax revenue will continue to fund a substantial portion of benefits even after trust fund depletion, Americans can make more informed decisions about their financial futures.