Social Security Going Broke - Faster

As pretty much anyone and everyone who's paid any attention to the news for the past generation knows, Social Security, as it is currently configured, is going to run out of money.  It's simple math.  But it has always (to a great many people) seemed like a distant prospect, not something that demanded to be dealt with right now.

For decades and decades, the program has muddled along, with a few tweaks here and there, running a surplus of funds paid it by workers versus benefits paid to retirees.  And, of course, the federal government "borrowed" those surpluses from the Social Security fund and spent them on just about everything else under the sun.  Which means there has been an ever growing IOU in the "trust fund".  Couple this with the beginning retirements of baby boomers, and many people have pointed out that it's going to be a problem sooner rather than later.

Well, guess what?  That day of reckoning is here.  Via USA Today:

WASHINGTON — Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability.

The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.

"Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two." ...

In case you're wondering, "negative" means they will be paying out more than they take in. The recent acceleration of baby boomer retirements due to the state of the economy (ie some involuntary retirements), and the payment surplus began to disappear.  Which means that now it is Social Security that will be looking to the rest of the government to "get its money back".

Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and
benefits owed.

Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017. ...

And these were the same experts that predicted, back in 1983, that the system would be "sound" until 2058.

 

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