In what has been known widely for years, the Social Security Administration (SSA) is starving for cash.
According to a recent report released by the U.S. Treasury Department, the Old-Age and Survivors trust fund will only be able to pay the scheduled Social Security benefits until the year 2033, while the Disability Insurance fund has been estimated to be adequately funded through 2057. As for the all-important Medicare’s hospital insurance fund, it is expected to run dry in 2026.
The report’s findings surely made anxiety levels rise for those individuals who are already enjoying their golden years and those who are nearing retirement. However, know that does not mean Social Security will no longer be around. If no changes are made to the current system, the program will be able to pay only 78 percent of benefits as scheduled. For example, for those who are receiving $1,500 a month, that amount could be slashed to only $1,170.
What data show is that the money from the Social Security program is vitally important to millions of seniors. Approximately 20 percent of married couples and 40 percent of singles receive at least 90 percent of their income from Social Security benefits alone, according to SSA.
The Treasury Department noted in a statement that “the finances … have been significantly affected by the pandemic and the recession of 2020.”
“Employment, earnings, interest rates, and GDP dropped substantially in the second calendar quarter of 2020 and are assumed to rise gradually thereafter toward full recovery by 2023, with the level of worker productivity and thus GDP assumed to be permanently lowered by 1 percent even as they are projected to resume their pre-pandemic trajectories,” writes the report.
“In addition, the Trustees also project elevated mortality rates related to the pandemic through 2023 as well as reductions in immigration and childbearing in 2021-22 from the levels projected in the 2020 reports, with compensating increases a few years later. These alterations to near-term data and assumptions all significantly impact the outlook of the programs,” it continued.
Future of Social Security
However, according to AARP, such fears that Social Security will become insolvent should be kept in check.
“As long as workers and employers pay payroll taxes, Social Security will not run out of money. It’s a pay-as-you-go system: Revenue coming in from FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) taxes largely cover the benefits going out,” the group says.
“Social Security does face funding challenges. … To avoid that outcome, Congress would need to take steps to shore up Social Security’s finances, as it did in 1983, the last time the program nearly depleted its reserves,” it continues.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.