Social Security is a bedrock program in the United States. Social Security is an entitlement program that pays millions of people an income each month.
This is part of a 4 part Social Security series.
Part 4 - Social Security: The Future
Future of Social Security
A question many people ask is, “should I just assume Social Security won’t be there for me?”
While there are issues, they likely aren’t as terrible as you’d expect and we still have plenty of time to shore up the program.
Demographic Trends
Baby boomers
In 1950, the ratio of workers to Social Security beneficiaries was 16.5 to 1
In 1990, the ratio was 3.4 to 1
In 2020, the ratio was 2.7 to 1
In 2035, Social Security projects a ratio of 2.2 to 1
Here is a cool population distribution chart from 1900-2020 and projection beyond, source.
Critical Dates
There are few trust funds given the different programs, but here are some key past and projected dates for the Social Security trust funds:
2010 - Social Security’s cost exceeds the non-interest income
2020 -Social Security’s total cost exceeds total income
2034 - Projected depletion date of Social Security Old Age, Survivors, Disability Insurance (OASDI) Trust Fund
Crystal Ball
After the coffers run dry, Social Security would have enough income to pay about 78% of scheduled benefits, 78 cents on the dollar.
There are a few options to shore up the program
Increase taxes
Reduce benefits
Reduce the COLA
Combination of the above
Congress has been seeing this report for years and has yet to change. More than likely, until this becomes a pressing issue, nothing will happen in the next few years.
Although, it must be nice having their own printing press in case they ever need it…
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