Excerpt of an article by Stephen Ohlemacher | Associated Press
Social Security’s disability fund is projected to run dry next year. The retirement fund has enough money to pay full benefits until 2035. But once the fund is depleted, the shortfalls are projected to be enormous.
The stakes are huge: Nearly 60 million retirees, disabled workers, spouses and children get monthly Social Security payments, and that number is projected to grow to 90 million over the next two decades.
WHY IS SOCIAL SECURITY AT RISK?
Social Security’s long-term financial problems are largely a result of demographic changes. Every day, about 10,000 people in the U.S. turn 65. These are the baby boomers.
Typical boomers, however, didn’t have as many children as their parents did. As a result, relatively fewer workers are left to pay the payroll taxes that support Social Security.
In 1960, there were more than five workers for every person receiving Social Security. Today there are fewer than three. In 20 years, there will be about two workers for every person getting benefits.
Americans are also living longer. In 1940, someone who was 65 could be expected to live about 14 more years, on average. Today, they can expect to live an additional 20 years, on average.
HOW BIG IS THE LONG-TERM PROBLEM?
Over the next 75 years, Social Security is projected to pay out $159 trillion more in benefits than it will collect in taxes, according to agency data.
That’s not a typo.
Adjusted for inflation, the shortfall comes to $35.3 trillion in 2015 dollars. That’s nearly twice the national debt, which took the entire federal government 239 years to accumulate.
DID CONGRESS ALREADY SPEND THE TRUST FUNDS?
Yes. For much of the past three decades, Social Security produced big surpluses, collecting more in taxes than it paid in benefits. But as Social Security was generating surpluses, the rest of the federal government was running deficits, for all but a few years around the turn of the century. To finance deficit spending, the Treasury borrowed from the public and from other federal programs, including Social Security.
DIDN’T CONGRESS FIX SOCIAL SECURITY UNDER REAGAN?
Yes. Social Security was on the brink of insolvency in the early 1980s when Congress and President Ronald Reagan agreed to gradually increase payroll taxes and to reduce benefits, in part by gradually raising the retirement age. Those changes didn’t permanently fix Social Security, but they provided enough revenue to pay full benefits for about 50 years.
Thanks to Stephen Ohlemacher for writing the article from which this excerpt came; Associated Press for committing its resources to publishing the article; Stephen Ohlemacher for helping me find the article; and all the people who, directly or indirectly, made it possible to include the picture and text in this post.