For the first time since the Social Security overhaul in the 1980s, the federal government will be required to repay money to the Social Security Trust Fund because the fund will collect less this year than it pays out.
This is all purely mathematical stuff.
Between growing numbers of baby boomers retiring and collecting monthly checks and fewer people working because of the still-struggling economy, the balance has shifted. Instead of Social Security taxes continuing to build the fund as they do in most years, the fund now has to tap into reserves to pay the monthly benefits. Or it will by year’s end.
But, as Americans well know, the government has already tapped those reserves and left Treasury bonds in place of the cash. To meet the obligations of the program, money will have to be found somewhere, and that will likely mean borrowing it from other sources.
Government analysts note that the Social Security Trust Fund will remain solvent for several more years — until 2037 under current projections.
At that point, the government IOUs that sit in the fund instead of cash will have been reclaimed and the money spent on benefits. The trust fund will be empty, unless Congress acts to fix the program by raising taxes on workers, reducing benefits to retirees, pushing out retirement date eligibility, means testing the eligibility of retirees, or some combination of those options.
And it will almost certainly be “fixed,” at least until the next time numbers get into imbalance. Given the time value of money, the sooner the program is fixed, the better off Americans will be.
Social Security has been an enormously successful program that has pulled generations of older Americans out of poverty to live their golden years in relative security — if they also planned for other sources of retirement income. Social Security by itself is not enough except in extremely rare and unusual circumstances.
If Social Security ceased to exist today, almost half of all retired Americans would be living in poverty. As it is, because of this program, only about 8 percent are impoverished.
As a supplemental income source for senior citizens, it has done its job and will continue to do so into the future.
Congress will need to ensure that the program remains solvent, and the sooner the better.
Provided By: The Times-Call
