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Social Security Could Go Belly-Up by 2035
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If you’re like most American adults, you’ve put into the Social Security system – it’s the safety net that’s supposed to keep the elderly from falling into poverty after decades of hard work.
The Chief Actuary of the Social Security Administration writes, “Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman.”
In a nutshell, the SSA says by 2035, regular taxes won’t be enough to cover all Social Security benefits because Americans are having fewer children than we did before. There aren’t enough payers putting into the system right now.
“Most research finds that the widening gap in life expectancy by socioeconomic status is driven by improved health outcomes for higher-SES people,” the report says. “In recent decades, the mortality gap between higher- and lower-SES individuals has widened substantially… Estimates suggest that the impact has been substantial: lifetime benefits have greatly increased for higher-SES individuals, while falling or remaining stagnant for lower earners.”
But still, that’s not the whole story. According to a memorandum to the Committee on Ways and Means in 2016, the cost of paying out benefits will exceed its income by 2020 – and all of the reserve will be depleted by 2035. That would mean that taxes would have to cover more than the 75 percent that the SSA is letting on right now, and that taxes would have to increase substantially.
What Do You Think?
It’s tough to get a straight answer when it comes to Social Security. Based on what you’ve read (other than here) and what you know about the program, what do you think the government will do to make up for the shortfall? Will they make up for the shortfall? I’d love to hear your opinion, so please share your thoughts on my Facebook page or on Twitter.