Until the economic crisis this year, the biggest thing on retirees’ minds was whether Social Security was going to go bankrupt. Actually, scratch that. Retirees didn’t have to worry about it, future retirees did because there were concerns that the number of people drawing from the program would outstrip the number of people contributing to it. It was a classic case of a Ponzi scheme come undone. This was, in part, because the Social Security Administrator, in its annual report, reported that starting 2017, the program will be paying out more in benefits than it collected in revenue. By 2027, Social Security would have to tap the “trust fund,” its savings, to meet the program’s obligations. Then, by 2041, the trust fund would be exhausted and the program would only be able to pay out 75% of its benefits.
2017, 2027, 2041.
Of course, none of those numbers said Social Security would coll,apse. Even by 2041, 75% of benefits would be paid out. Also, there is a lot that can happen between now and 2041, let alone 2017. The program could expand to collect more money (raise the Social Security income cap) or it could push out retirement (as it has already done in the past), all those changes can have an impact on the financial status of Social Security.
I wouldn’t be worried about it going away, but there will certainly be changes coming.
Comments
2 responses to “Will the Social Security Program Go Bankrupt?”
I agree that the predicted demise of SS is overstated and overhyped. A few tweaks in the retirement age and/or earnings cap will fix it although I am afraid they will end up means testing the benefits so as to penalize those of us who have been saving.
Forget about social security, medicare for baby boomers will cost 5x the cost of social security. Here is a video of the former head of the US GAO trying to get people to take note of the enormity of this upcoming problem.
This is definitely not hype!