Social Security fund now seen to be empty by 2037
By STEPHEN OHLEMACHER, Associated Press Stephen Ohlemacher, Associated Press – 1 hr 34 mins ago
WASHINGTON – Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.
The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016
This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples — to $130 billion — when the new one-year cut in payroll taxes is included.
Congress has promised to replenish any lost revenue from the tax cut, but that's hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.
More than 54 million Americans receive Social Security benefits, averaging $1,076 per month.
The outlook for the program has grown more sour as the nation has struggled to recover from the worst economic crisis since Social Security was enacted, during the Great Depression. In the short term, Social Security is suffering from the weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.
The projected deficits add a sense of urgency to efforts to improve Social Security's finances. For much of the past 30 years, the program has run big surpluses, which the government has borrowed to spend on other programs. Now that Social Security is running deficits, the federal government will have to find money elsewhere to help pay for benefits.
"So long as Social Security was running surpluses, policymakers could put off the need to fix the program," said Andrew Biggs, a former deputy commissioner at the Social Security Administration who is now a resident scholar at the American Enterprise Institute. "Now that the system is running deficits, it simply becomes clear that we need to act on Social Security reform."
President Barack Obama said in his State of the Union address Tuesday night that he wanted "a bipartisan solution to strengthen Social Security for future generations."
The president however has not embraced recommendations from a debt commission he appointed last year, including one that would gradually increase the full retirement age, from 67 to 69, over the next 65 years.
But Obama did lay down some markers for making Social Security closer to solvent.
"We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities, without slashing benefits for future generations and without subjecting Americans' guaranteed retirement income to the whims of the stock market," Obama said.
The program has been supported by a 6.2 percent payroll tax, paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2 percent. The lost revenue is to be repaid to Social Security from general revenue funds, meaning it will add to the growing national debt.
Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 — unless Congress acts in the meantime. At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.
The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment, with interest.
"Social Security taxes are not going to pay for the spending, so it's got to come from somewhere else," said Eugene Steuerle, a former Treasury official who is now a fellow at the Urban Institute. "We can go through long arguments about whether its owed money by the trust funds or not, but that doesn't alleviate the simple fact that it's got to come from somewhere."
Social Security supporters are adamant that the program will be repaid, just as the U.S. government repays others who invest in U.S. Treasury bonds.
"Its' an IOU that is backed by Treasury bonds and the faith and credit of the United States government," said Sen. Bernie Sanders, I-Vt. "It is the same faith and credit that enables us to borrow from rich people and from China and from other countries. As you well know, in the history of this country, the United States has never defaulted on one penny owed to a creditor."
Social Security Fund Now Seen to be Empty by 2037
Social Security fund now seen to be empty by 2037
I know we're not supposed to get political here but I don't see why we can't have the SS tax to be paid on income above the current $108K/yr rather than asking people to work 'til they are 69 when so many can't get jobs in their late 50s!
It would be nice if GW would pay back what he stole from it too.
I really don't think politics needs to be discussed. What people have to understand is that one shouldn't make promises that one can't fulfill. Social Security, as structured in 1935, did this and it has worked well for many years because you had more people paying in than were receiving benefits. Corporations have gotten into similar difficulty with their defined benefit pension plans. That's why most corporations have gotten rid of them because they are too costly. If the population had grown steadily this would not have been a problem for Social Security but there is no good way for the current design of the Social Security System to handle a population spike like the baby boomers. Washington needs to work it out but something has to change. People will either have to work longer, take a lesser benefit or be taxed at a higher rate. None of those choices is popular. But, the well is getting drier. Who's to blame ? Well, the blame game can go back to 1935 when the government promised an "entitlement" that they can't deliver in the 21st century. And then other entitlements were later added, liked disability benefits, widow benefits, dependent benefits, etc., etc.
We like to have our cake and eat it too but, in this case, it's giving us a belly-ache. Current recipients and future recipients need to look at this issue realistically and try to at least understand the problem at hand.
Yes... linthicum. And if I might add, the life expectancy has grown far beyond the initial anticipation. http://www.ssa.gov/history/lifeexpect.html
I am amazed to realize that the retirement age limits haven't been increased more than they were.
Initially, social security was intended to supplement a workers' income. It was expected that the retiree would continue to work or supplement his social security with other savings or investments. Or as was common in those days, many grandparents would live with their children so they did not have high living expenses. We now expect to live alone with it as our sole income.
It is a sad burden to place on the younger generation of workers.
I have a bit of a different perspective on this. We paid for our parents social security so I don't think its unfair to hope for the same from the next generation. (Paying for the rest of our debt - yes, that's simply not fair). I've been saving my entire working life. When I was 45, my company froze my pension. So all my calc. for how to fund my retired were thrown away & I suddenly had a huge hole in my plan. At age 45. Now, I'm 51 and there's talk of doing the same to social security. I think its much fairer to ask folks to pay the tax on higher income levels than they are now (while they are working and earning a substantial income) than to ask people who have worked their entire lives to have the system change after its too late to make adjustments.
Tamm, I have the same opinion as you. Having lived through the whole period. It was heavily advertized as The children paying for their parents thru the system.I was proud to pay for mine and expect the same of this generation to pay mine.This wage thing is not my fault. I fought for fair wages for this generation. I did not throw it away.Its up to you to see that you get fair SSI without taking mine away.Fair wages too. Don't gripe! Do something positive like we did. We went thru a couple hard periods. We came thru intact because we were willing to stand up for our rights peacefully more or less. Hope i don't sound harsh. I don't mean it that way.LOL
How many of you vote constantly?
Yes, I vote all primaries, all elections, all school and all county elections in spite of the outcomes Then I feel justified to complain but this isn't a political forum so back to the SS.
My FIL started paying into SS the first day it started. He retired at sixty five and lived till 93. I often wonder how much he paid in versus how much he drew out.
Recalling back to the sixties/seventies there was a push for smaller families called 'zero population growth'. I won't argue the politics of it at all but many from that generation don't have children. Should our children also help support the childless through the SS system? Or should we cut them out?
And how many people I know that are retirement age, draw their SS check and continue to work. Isn't that depleting the system?
Then at the age of 66, the retiree can make all the income they want and not have it affect the SS earnings at all. We can be "Retired with Double Income" ~ called R ~ DINCs? When our children are struggling to raise their children and supporting those that are R ~ DINCs and hoping there will be some left when they get there because they don't make enough to establish their own retirement plan... I don't know.
This message was edited Feb 14, 2011 12:27 PM
This isn't easy. If someone has not saved enough to live on SS alone, why shouldn't they be able to work (if they can get a job) and draw SS. Its supposed to be a supplement only.
There is also a limit as to how much one can make before one is docked money from SSI/ I know because my DH was docked a couple of times after he started drawing SSI.
A couple of years ago i was living very well on SSI. Today, It is a struggle.and i make a little more than most. I also own my own land and house. Live modestly and my utilities are comparatively cheap.
There is also a limit as to how much one can make before one is docked money from SSI...
He must have retired early? The earnings limit applies only to those retired between 62 and 66. At 66 YO, they can make as much as they want without it affecting benefits.
The good thing is, regardless of retirement age, they are also contributing to the system by paying social security and income tax on what they earn.
They are now taxing your pensions. Hubby is now $42 a month poorer because of the taxes on his pension. Now our new governor says he wants his cut of our pension too as a new tax. I don't think that's fair. Once you are old and retired there is no way to make up that money you were counting on to live on. Not to mention the cost of everything is skyrocketing but they aren't givine cost of living on the ss checks either.
We now live and compete in a global economy and our survival is dependent on interaction with others ... in the world. It ain't easy !!! We rely on our elected leaders to make the best decisions for our country. They do not have an easy task. But, in the middle of all of this, there is a lot of waste, fraud, etc. The government must take the lead in reducing this waste. That would be a good start.
To be honest, I wouldn't know where to begin. We all need to have a budget just like the federal government needs to have a budget. And, we should all live within our means. That makes for some tough decisions. We want good roads, good schools, good everything. But, money does not grow on trees. It has to come from somewhere. Medical costs are out-of-hand. Why ? Because of the cost of research and development. Somebody has to pay for all of this. A new drug comes out and the drug companies charge an arm and a leg to get their investment in R&D returned to the corporation's bottom line. Sure, we need R&D, but how do you decide where to invest and not invest and how much ? It ain't easy. We are so divided among the haves and the have-nots.
What's fair this day and age ? No one ever said life is fair. In the 1950's, Ted Williams, one of the greatest baseball hitters of all time made no more than $100,000 a year. I could go to a ballgame and sit in the left-field bleachers for 75 cents. Today, the better ballplayers make $10-$20 million, per year. What does fair mean and to whom ? Corporate salaries and bonuses are completely out-of-hand. There used to be a time when there was a reasonable correlation between the top salary and the bottom salary. But, no more. What did a Super Bowl commercial cost and who paid for it ? Too much of a good thing has caught up with us.
Anyway, I'm just rambling. But, there is no easy fix. There will be more pain before it gets better, if it ever does. But, one thing is clear, neither the government, nor the people, should spend more than they have ..... starting today.
Yes... I will agree.
If there are younger folks reading this with an eye to retirement, my advice to them would be:
To acquire a smaller home (preferably handicap accessible) and pay off their home as well as any indebtedness.
Then set a budget and learn to live within their budget means.
Salting funds for retirement is not always the safest investment but one will always need a roof over their head.
Podster, As usual you are so right. Hope the young people take notice.
That is what we did. And i will always have a roof over my head and enough SSI to keep me from starving.That is all we ever wanted. Should worse come to worse. I can survive on the wild stuff that grows up here.I'll never run out of firewood.or fruit and nuts and meat.
Your area and lifestyle sounds very similar.
Retirement isn't always what we looked forward to...
... but it is what we make it!
I am so tire of people saying that GM pensions are 50 to 60 thousand a year.My hubby retired from there and his pension is less than his social security.We pay towards our health care ,and all of our dental,and vision insurance. Now the Mi govenor is talking taxes.
His first wife didn`t work cause she was so sick for years.so not much in savings.
my first husband was sick for years and I came into this marriage with lots of medical bills.
We live very modest. We drive an old car and have an old truck.Thank God he can keep them running..
i have a sister in law that lives on less than 1000 a month,and gets 88 bucks in food stamps a month.
I thank God I am better off than most people our age.
I see our kids struggling every month cause they have cut their wages and there hours.
The last time I checked, the average GM pension benefit was slightly over $15,000 per year. The problem is with their defined pension benefit. Like many companies, the pension plan has been underfunded. That's why corporations have been doing away with them. The government should have required that these type plans be fully funded at all times. GM's pension plans are currently underfunded by over $20 billion dollars. Why promise something that you may not be able to deliver in the future ? GM had filed for Chapter 11 bankruptcy protection in 2009. I don't know what the long-term impact can be on the pension benefits. Some of it would be surely protected by the Pension Benefit Guaranty Corporation (PGBC).
Right now the NFL players and the owners are in a battle to share billions and billion of dollars. Who ultimately pays these billions ? We do ...... Isn't it sad ? Big boys fighting over billions of dollars while the rest of our society is struggling to make ends meet. Only in America. Why don't both parties first agree to reduce game ticket costs ? How about reducing the cost of a hot dog or beer ? I can always play NFL Football on my Wii if I can't do without football. I have no sympathy for GREED. It's a prime example of how the rich get richer and the poorer get poorer, over time.
I agree that the sport/entertainment business salaries are through the roof for the stars...as is it for CEOs, and some types of union retirees.
GM just went along with union demands for years as they just could not afford a six month strike while the competition was merrily sailing along.
AFDOLL, You're governor and senators have made the news. Thank God for you're Senators.They're fighting for the rest of the states too.ie the working class.
My DH worked for GE. Another big Union company.
If we allowed undocumented to become documented they would pay into Social Security and they are usually young and with more than 1 child so they could be providing some of the money to fund SS in their lifetime and their children's lifetime instead of using services but not paying their fair share.
I'm curious. How do they get work without a SSI number? I thought that was the first thing anyone would ask for.
Actually they get false SS numbers so they can work and pay into the system. The bonus to the federal gov't is they do not draw out from the system in retirement and if I am not mistaken the majority of the expense for the services the undocumented receive comes from the states. That is what has financially hurt the border states so much. i.e. California. Now, thinking about it in those terms, is there a reason the federal government doesn't want to crack down on illegal aliens?
I'm thinking it was the senators from Wisconsin that fleed the scene not Michigan that is in a flap right now.
This message was edited Feb 20, 2011 7:12 AM
You're so right Podster. I t was Wisconsin. Sorry about that guys.