According to the most recent Social Security Trustees’ Report, the Social Security Trust Fund is being depleted more quickly than previously thought. Social Security is now expected to be paying out more than it takes in by 2016, which is more than a year sooner than had been projected in the previous trustees’ annual report.
Once Social Security begins paying out more than it brings in, it will rely on the balances in the Social Security Trust Fund to make up the difference. But unless changes in the Social Security program are enacted, the trust fund will be depleted by 2037. That’s four years earlier than had been projected in last year’s report. After the Social Security Trust Fund is depleted in 2037, annual Social Security taxes collected are expected to be enough to pay just 75% of current benefits through 2083.
Not only is this bad news for future retirees, it’s also bad news for our nation as a whole, because of the effect it will have on the federal budget deficit and the national debt.
One of the sneaky little tricks our federal government uses to mask the size of the budget deficit is to count the surplus generated by Social Security (the excess of Social Security taxes collected over benefits paid) as part of the total federal budget. Because Social Security generates a surplus each year, that makes the budget deficit in the general fund appear smaller than it really is. But once Social Security starts paying out more than it brings in, the true budget deficit in the general fund will be exposed for what it really is.
The Social Security crisis will also have a chilling effect on our national debt, because as our budget deficits mount, so will our national debt. To put it bluntly, the current path is simply not sustainable.
So what’s the solution? In theory it’s quite simple. The solution to the crisis is for our Washington politicians to have the political backbone to enact social security reform that will restore financial soundness to our social security system.
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