Social Security’s trust funds are projected to run out by 2035, but that doesn’t mean retirees will be left with nothing.

New research from the Cornell SC Johnson College of Business reveals that most Americans misinterpret what happens when the funds reach zero, and the way information is presented plays a significant role in this confusion.

“When people see charts or headlines focused on the shrinking trust fund balance, nearly two-thirds believe benefits will stop entirely after depletion,” said Suzanne Shu, the John S. Dyson Professor in Marketing at the Charles H. Dyson School of Applied Economics and Management. “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. When information emphasizes these ongoing inflows by reminding people of their tax payments, fewer people make the ‘zero-benefits’ mistake.”

Researchers call this error “inflow neglect.” It’s a mental shortcut where people focus on the stock of money – the trust fund – and ignore the fact that money keeps coming in. In a new study, Shu and her co-authors showed in six experiments with thousands of participants that simple changes – such as 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 reduce misunderstanding.

Their paper “Inflow Neglect: Forecasting Failures After Stocks Run Out,” published in the Journal of Experimental Psychology: General. Co-authors include Stephen Spiller, Hal Hershfield and doctoral student Megan Weber, all from the Anderson School of Management at the University of California, Los Angeles.

Social Security works like a pay-as-you-go system; today’s workers pay payroll taxes, which then fund today’s retirees. The trust funds are essentially a reserve cushion built up over decades. Because costs have exceeded income since 2021, that cushion is shrinking and will likely hit zero around 2035.

“Our research shows that this framing matters,” Shu said. “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%.”

Across five studies focused on Social Security and one in a different setting, of a company running out of inventory, the pattern was clear: Focusing only on the stock fuels pessimism. People shown the trust fund balance were more accurate about when depletion would occur but far more likely to think benefits would stop.

The research team also found that flow framing helps. Showing income and costs reduced zero-benefit beliefs, though more than half of participants still got it wrong. Reflection worked best. Asking people, “Will Social Security still collect payroll taxes after depletion?” before asking about benefits cut the error rate by roughly one-third.

Even in the unrelated inventory scenario, many participants assumed shipments would stop when stock hit zero, unless they were reminded that production would continue. This suggests inflow neglect is broader than just Social Security.

“Misunderstanding Social Security’s finances isn’t just an academic issue,” Shu said. “It shapes retirement planning and public opinion. If people believe benefits will vanish, they may claim early, use their savings more aggressively or support drastic policy changes. While depletion would trigger benefit cuts without legislative action, the system wouldn’t collapse.”

The findings also highlight a communication challenge. Government reports often emphasize the trust fund balance. That framing makes the depletion date of 2035 feel like a cliff edge. In truth, it’s more like a slope: Benefits would shrink, not disappear.

“The trust funds are a buffer, not the whole system,” Shu said. “Even after depletion, inflows continue, and so do outflows, albeit at reduced levels. Understanding that distinction matters for retirees, policymakers and anyone planning for the future.”

Sarah Magnus-Sharpe is director of public relations and communications at the Cornell SC Johnson College of Business.