Social Security now expected to run short on funds in 2035, one year later

[unyttigfjelltol]

Social Security was established as a pay-as-you-go system. In 1987, the income side went into a significant and unprecedented surplus that accumulated by 2020 into a $2.8T Federal government accounting entry called the "Trust Fund"[1]. Al Gore's "lockbox". We've been anticipating the "bust" forever because it's still pay-as-you-go and the demographics and structure don't work past the 2030s and never have.

This "Trust Fund" is pretty silly, especially in today's cleptocratic political environment. It's not like the trustees can invest it according to their fiduciary duties. And, it's not fair an entire generation has been paying more than required to support current retirees, only to have the system revert to pay-as-you-go for their own retirements. For this, as many economic gems, we apparently can thank Alan Greenspan[2]?

[1] https://www.ssa.gov/OACT/STATS/table4a3.html

[2] https://en.wikipedia.org/wiki/Greenspan_Commission

[jmclnx]

Very easy to fix, but one US party does not want to fix it. That party has spent the last 40 years trying to destroy it.

[rufus_foreman]

You've had periods where the Democrats control the Presidency, they control the House, and they control the Senate. If it is so easy to fix, why wasn't it fixed?

The answer is that it is not easy to fix, fixing it involves raising taxes, and people don't like taxes.

So the can gets kicked down the road.

[richwater]

I applaud whoever tries to minimize/reduce/remove a mandatory ponzi scheme.

[smeej]

It's telling to me that I completely sincerely have no idea which party you mean.

[nitsky]

What action could be taken to fix it?

[AndrewKemendo]

I’m 40 and at no point in my life have I trusted that social security will exist for me or anyone beyond my generation so this is just more reinforcement of that

You’re on your own folks

[schrectacular]

And when it runs out, those of us who have made sacrifices now to provide for old age will be a wealthy, "privileged" target.

[throw0101c]

> I’m 40 and at no point in my life have I trusted that social security will exist […]

It will exist mostly intact, just not necessarily at 100% benefits:

> If Congress does not act by 2035, the trust fund reserves are projected to be depleted. However, the income from Social Security taxes would cover 83% of scheduled benefits.

[…]

> By the year 2098, when I will be turning 117, they project the tax revenue will cover 73% of the benefits. That’s a long runway to shore things up.

* https://awealthofcommonsense.com/2024/05/is-social-security-...

It was never predicted to go to zero.

[AnimalMuppet]

I have always expected nothing. But I'm 62 now, and it looks like there may be something there for me after all.

For you, it's not looking great. But it has never looked great, and yet it's still (so far) paying full benefits. Don't plan on it, but don't be too surprised if you get something...

[isuckatcoding]

https://www.ssa.gov/oact/trsum/#:~:text=The%20Trustees%20pro....

Not sure why the media is running this title but from the official report:

“ The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year's report. At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 79 percent of scheduled benefits”

[throw0101c]

Short on funds to provide 100% benefits:

> If Congress does not act by 2035, the trust fund reserves are projected to be depleted. However, the income from Social Security taxes would cover 83% of scheduled benefits.

[…]

> By the year 2098, when I will be turning 117, they project the tax revenue will cover 73% of the benefits. That’s a long runway to shore things up.

* https://awealthofcommonsense.com/2024/05/is-social-security-...

It was never predicted to go to zero.

[smeej]

Perhaps this is my cynicism showing, but it's the Boomers who caused this problem. Let them suffer the shortfall as the natural consequence.

They've been the political decision-makers most of their lives because there were so many more of them than their parents. And they can criticize Millennials for receiving (?!) participation trophies they handed out until their faces are as blue as their hair, but they've systematically screwed the economy to their benefit their entire lives.

If there aren't enough people in the workforce and wages aren't high enough for payroll taxes to pay more than 83% of their SS benefits, then let them only receive 83% of their SS benefits.

I'm all out of sympathy for their entitlement.

[Jgrubb]

It's not gonna be them, it's gonna be Gen X that gets the shaft on this one and probably millennials that raise the capital gains taxes on the old people when they finally age into leadership roles and the old people by that point will be Gen X again.

[throw0101c]

> Perhaps this is my cynicism showing, but it's the Boomers who caused this problem. Let them suffer the shortfall as the natural consequence.

If you want people out on the streets, that would probably be a good way to do it:

> Nearly half of senior citizens receive 50% or more of their income from Social Security. One in 5 people 65 or older gets 90% of their income from the program.

* https://awealthofcommonsense.com/2024/05/is-social-security-...

There are a lot of poor Boomers out there, and SS is the only thing preventing them from being completely destitute.

[throwaway5959]

Quite a few of them will be dead by 2035. The earliest boomers were born in 1946, that’s 89 years old. They’ll have been collecting benefits for decades by then.

[joegibbs]

Could the US implement something like Australia’s superannuation? Every year, x% of your wage is put into a fund you choose, which invests according to your choice of strategy. You’re not allowed to access it until retirement age, and you get tax benefits for contributing to it. Would it be unconstitutional to force employers to put aside wages like that?

[RhysU]

That's opting into a 401k, essentially. Employers often match employee contributions to some amount. But it's not compulsory nor is it universally available. IRAs are, however.

[smeej]

I have an out-of-the-box suggestion: For any parents who have been paying in but agree to forego receiving any payments from SS, their children would have a choice:

1. Operate under the existing system. Pay into Social Security, and withdraw as normal when they're older.

2. Have 7.65% of their income invested in a total stock market index fund, which their employers would match. If they want, they can reduce their allocation below 100% stocks once they're 50 or older.

We're already below replacement value for children per family, so while there would be a few families large enough for the benefit to the children to be significantly more than what the parents are giving up, it's still going to take quite awhile for the existing system to wind down. Slow end, simple replacement.

[metabagel]

This can be shored up by securing additional funding. Republicans want to “save” Social Security by gutting it.

[dave333]

The most equitable way to fix this is instead of reducing benefits to 83% of normal across the board, they should reduce the benefits for the rich who do not need it anyway.

[neilv]

> 15 points [...] 50 comments

If we don't want posts to fall off the front page quickly, we have to remember to upvote when you comment.

[chefkd]

For someone who doesn't know anything about SS how did the Europeans figure it out? Is it because they have smaller populations?

[drewrv]

They tax people, especially high earners, at a higher rate than Americans. It’s not complicated. The US is the wealthiest country in the history of the planet. We could afford to fund social security if we wanted to but some people are opposed to it.

[justinator]

EU citizens generally pay much higher taxes, and get better retirement benefits for a wider variety of jobs, many of which would not be a career path that would have a good benefit package in the States.

And insurance that's not coupled with your employer.

The flaunting of wealth also isn't exactly culturally as strong as it is in the States.

My plan in the States -- in all seriousness -- is to be the local mountain hermit. I'll live semi-permanently in some hidden shack, I'll come down to town for odd jobs, hands-outs. Fringes of society for me.

[AnimalMuppet]

No, smaller populations doesn't help. It reduces the amount of benefits paid out of the fund, but it also reduces the payments into the fund.

[floydnoel]

I believe they are heavily importing immigrants currently. Not really possible to "solve" a ponzi.

[jltsiren]

Some countries have solved the problem, while others haven't. There is not much to figure out. There are three basic tools: higher contributions, higher retirement ages, and lower benefits. You just have to make decisions. Ideally decades in advance, to avoid unfair sudden changes.

[Ekaros]

We did not... In essence it is even more pay as you go. Tax everyone more and distribute that to pensioners. Though quite many pensioners are rather poor. Some with high earnings in late career do quite well.

[throwaway5959]

They’re also delaying retirement age, which is effectively a benefit cut.

[searealist]

Which countries?

[deadbabe]

Should I give up on any chance at social security in 40 years?

[metabagel]

No. Government needs to shore up the funding for Social Security. Although, it’s hard for the government to do anything meaningful when Republicans are in a position to block it.

[Ekaros]

Very unlikely. Plenty enough 70 year olds can still do enough damage... So no payments is very unlikely situation. What I would expect is much lower standard of living and maybe not getting the most expensive medical treatments.

Specially later I think is something that as society we have to accept. You can not keep everyone alive as long as possible. On other side, with AIs and lot of drugs becoming generic we might be able to medicate affordably for quite a while.

[lisper]

Yes. Worst case you will be pleasantly surprised.

Personally I would be thrilled if civilization survived another 40 years.

[dpkirchner]

No. It won't go away entirely. Plan on getting at least 70%, and vote to get the full amount.

[OedipusRex]

2035 is in 11 years.