You’ll keep receiving your Social Security checks in years to come – but the program will be as good as broke. Historically, Social Security has run large surpluses, and thus didn’t add to the federal deficit. In fact, during the Clinton presidency, some of those surpluses were (improperly) re-purposed to plug the federal deficit, which resulted in the so-called “Clinton surplus.”
As time has gone on, however, the number of workers per retiree on Social Security has shrunk, and with that, so has the program’s solvency. The program has been running deficits since 2010, and will roughly accumulate an $840 billion shortfall from 2015-2025, adding that amount to the national debt.
In addition to the cash flow issues the program is suffering, for the first time in 36 years, Social Security will be tapping into its trust fund.
According to MarketWatch:
Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year. Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year.
For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year.
It should be stressed that the reports don’t indicate that benefits disappear in those years. After 2034, Social Security’s trustees said tax income would be sufficient to pay about three-quarters of retirees’ benefits.
Social Security’s reserve that pays for disability benefits will be depleted by 2032. As a result, all Social Security reserves will be depleted by 2034.
Benefits will have to be cut by at least 21% in 16 years if nothing is done – and reforms aimed at bringing the program back to solvency would likely implement cuts as well to future recipients.
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Social Security reform hasn’t been on any administration’s mind since a brief and failed attempt at semi-privatization in 2005 when George W. Bush advocated for personal accounts (allowing one to voluntarily opt-out of Social Security). The Trump administration doesn’t have any official stance on Social Security reform, though the views of those in his administration would lean in the direction of privatization. (RELATED: Social Security Should Be Privatized).
What government program will go bust next? Let us know your thoughts in the comments section below!
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