Social Security to fall $623 billion short in 20 years
It’s no secret that Social Security is floundering. Money is running out, and soon, time will be running out too. Despite that, we’ve heard little talk about it from prospective politicians on either side of the aisle during this campaign season. So, how bad can it be?
Well, the numbers aren’t looking good. Although serious effects of the SSA’s budget crisis probably won’t be felt for another 20 years — which may be why politicians are focusing on other topics – there will be a steep downward spiral starting in 2033 if nothing is done to bolster finances.
Starting two years ago, and for the first time in decades, the amount of money Social Security paid out was greater than the amount of tax money coming in. While the SSA is still working with a surplus, it won’t last more than 20 years, say the trustees. When 2033 rolls around, they are projecting to have to cut benefit payments by 25 percent. From there, things could quickly get worse.
According to a recent report by the Social Security trustees, the program will likely fall short by $623 billion 20 years from now. In 2045, that number would hit $1 trillion and climb to $7 trillion by 2086. In order to prevent such a shortfall, the SSA says it would need to invest more than $8.5 trillion with returns of almost 3 percent above inflation. Unfortunately, it doesn’t have trillions of dollars to invest.
So, what does this mean for us now? For those who are older and currently receiving Social Security benefits, probably not much. But for younger generations, it could mean having to pay much more of their own money to support themselves through disabilities or retirement. Hopefully, this dismal outlook will encourage lawmakers to take a more serious look at how to ensure that people keep receiving the benefits they need and deserve.
Source: Atlanta Journal-Constitution, “Social Security surplus looks small,” Stephen Olemacher, Aug. 13, 2012