Social Security is Running Dry
But that doesn’t mean it will cease to exist!
Social Security has been an important topic in retirement for decades, but a lot has changed in recent years. For preceding generations, a senior could obtain a sizable portion of their retirement income, solely from social security benefits. Nowadays, seniors that rely on social security payments have trouble breaking even. This is due to an increase in inflation, the cost of living in senior facilities and other senior costs. Unfortunately, Social Security isn’t cut-and-dry. A senior retiring today will likely obtain 25% more in benefits than future retirees.
Why Are Social Security Benefits Decreasing?
The Congressional Budget Office has reported that Social Security’s trust fund (a large source of Social Security benefits) will run out by 2030. This is expected to reduce benefits by 25%!
The source of the issue is a budget deficit between payroll taxes and the amount spent on the social security program. This disparity is resolved with the social security trust fund, so when it runs out, benefits will experience a large decrease. Remaining funds will rely primarily on payroll taxes.
Has The Social Security Trust Fund Been Depleted Before?
According to the Social Security Administration, the larger trust fund (OASI) was almost depleted in 1982. It was temporarily patched up with emergency legislation that allowed social security to obtain funds from other federal programs. This borrowing effectively prevented retirees from seeing a reduction in their benefits. Soon afterwards, the funding issue was resolved with legislation that improved financing for the OASI trust fund and the borrowed funds were paid off within 4 years.
So What is The Problem with Social Security Now?
Even though there was a temporary resolution for social security trust fund depletion in the early 1980s, long-term issues with funding still persist. Without making any changes to the program, the Social Security Administration expects benefits to be only 75% of their current value. That’s much lower than current rates and poses a financial burden for future generations.
Congress Has No Personal Motivation to Improve Social Security
Whether you like small or big government, Congress doesn’t have a personal interest in social security because lower benefits barely have any affect on them. Congressional representatives are eligible for large pensions that value about 80% of their current income in retirement and the median salary for a congressional representative surpassed $1 million in 2013. As a result, congress doesn’t need Social Security benefits to retire comfortably.
Our congress needs to know that we value Social Security and that it is of the utmost importance, otherwise they probably won’t do anything. We need as much exposure to this issue as possible in order to find a true solution. At the moment, it is out of sight and out of mind, but congress will eventually change their tune, if the people demand improvements to the social security trust fund in incumbent elections.
What Can I Do About Social Security?
There is a lot that you can do to help improve the social security program. The Social Security administration recommends “extensive public discussion and analysis of the long-range financing problems of the Social Security program.” You can help by spreading the word among your friends and family, voicing your concerns with local government, running for public office yourself, or by writing your congressional representatives.
The sources of funding need to be improved to avoid lowering social security benefits by 25% and it requires federal legislation. We need to get the word out, or congress won’t prioritize this issue. It will take a lot of grassroots organization to save social security from it’s grizzly fate. We can’t demand change, if people don’t understand the issue at hand. Share this post to help your friends understand what’s going on.
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