Posted on 01/06/2020 7:48:26 AM PST by SeekAndFind
2020 is here, and many people are excited about starting a new decade. Yet for those who watch Social Security's financial condition, New Year's Day just means we're a year closer to the challenges facing the key government program.
This year is likely to be the last one that Social Security manages to keep its spending under a key psychological level. Starting in 2021, the amount of money that the Social Security Administration spends on benefits for retirees and survivors of retired workers will exceed $1 trillion for the first time -- and that's just the beginning of an upward surge that will pose problems for the program's finances sometime during the 2030s.
This might not be the first time you've heard about Social Security flirting with the $1 trillion mark. In 2019, the total expenditures from the entire Social Security program -- which include not only retirement and survivor benefits but also the payments it makes to disabled workers and their families -- went over $1 trillion for the first time in the program's 83 years.
Yet even though millions of people rely on disability benefits, the retirement side of Social Security makes up by far the majority of total spending from the program, and so it's in position to follow suit over the $1 trillion mark in quick succession. In 2019, about 90% of scheduled benefits were tied to retirement, compared with just 10% in disability benefits. Few see that proportion changing markedly anytime in the near future.
Moreover, the amount that the government spends on retiree benefits will only rise over time. By 2028, Social Security retirement and survivor benefits will likely cost more than $1.5 trillion, and with payroll tax revenue failing to keep up with that surge, the program will be drawing down nearly $200 billion per year from its reserves to pay scheduled benefits at that point.
There's no agreement in Washington about how to solve the problems that Social Security faces. Some believe that reining in the rate of growth of future benefits is the best way to control spending. And measures like tying future increases in benefits related to costs of living to indexes that grow more slowly than the current inflation metrics could help preserve the program's financial condition longer.
In the past, Social Security has gradually raised the full retirement age, at which participants are entitled to receive full benefits under the program. And some lawmakers have proposed further increasing the full retirement age in an effort to save even more over the long run. Yet for the most part, these measures are aimed merely at slowing the rate of growth in Social Security spending rather than actually reducing it.
Other lawmakers believe that the better solution is to look at program revenue. In particular, one popular provision would lift the current cap on the Social Security wage base, potentially making more income subject to Social Security taxation and thereby boosting revenue. Some of those advocating for a higher Social Security payroll tax would actually seek to increase benefits, with the corresponding rise in the rate of spending from the program.
The demographic surge of baby boomers who are collecting Social Security benefits has boosted the cost of the program immensely over the past several years, and it'll be a long time before death rates among that cohort rise enough to let up the pressure on Social Security expenditures.
Until that happens, you can expect to see total spending on retirement benefits continue to rise. And without action from Washington to bring revenue and expenditures into balance, that will inevitably lead to a massive disruption for those receiving Social Security benefits in the future.
It started when presidents used it as their own personal piggy bank to finance their special programs.
Well; one way to make up any shortfall is to discontinue all financial benefits to illegals which cost US taxpayers over $260B last year. That includes social security to illegals who never paid into it.
They always say Social Security is going to run out of money.
They never worry about welfare programs running out of money.
The disability thing - that has nothing to do with retirement! we were led to believe that SS was a retirement account. Instead, it pays “crazy” money to parents of unruly kids.
Change it back to retirement, and it’ll be solvent.
SS will be marginally better off in 2020...the sonsofbitches reduced my wife’s and my monthly payment $70 clams each.
Yeah, but thankfully there is plenty of money for trespassers to be taken care of. Yeah, it’s awesome how benevolent we are huh? (I meant how much we suck)
Thanks. I know where $27.00 of it went. LOL!
How could they reduce your payment, was it because they raised Medicare payments???
Social Security could have been put on an actuarially sound footing 25 years ago with such tiny changes no one would have noticed them.
But Americans are stupid, so we didn’t.
Without giving too much away about my birthday, I turn 66 in the next few weeks. I’m going to continue working while taking SS. The reason is simple: My wife’s will bump up a few hundred a month, and I’ll be getting something roughly a few thousand a month as well. And I’ve earned it and more with what I’ve put into it.
But I’ll also be able to continue working and still keep all my SS. This matters because it’s the only retirement we have and we’re using it to pay off our mortgage. Once that’s paid off, I’m quitting ever (hopefully) having a “job” again. But I’m also taking it at this time because I don’t know how long it will be that I’ll be able to do this without them changing the rules. They rarely change them retroactively, but can hammer people pretty hard with rules changes before they start taking it.
And yeah, I’m aware of the tax hit...at least Kentucky has no income tax on SS.
The cap will be lifted. A Tobin Tax will be passed and the revenue devoted to SS benefits.
Those are the only 2 fixes that will be politically palatable.
There are very few congress critters who didn't participate in the graft.
+ 100000
Social Security payments never go down, so something else happened.
There’s a reason people call them “entitlements”
I suspect they will get rid of the tax cap on SS in effect taxing the rich. Always thought it a windfall on the years I exceeded the cap and one year actually did it in May.
But, but we were promised back in 1964!
https://www.ssa.gov/history/ssa/usa1964-2.html
Self-Supporting
“The program is designed so that contributions plus interest on the investments of the social security trust funds will be sufficient to meet all of the costs of benefits and administration, now and into the indefinite future—without any subsidy from the general funds of the Government.
Both the Congress and the Executive Branch, regardless of political party in power, have scrupulously provided in advance for full financing of all liberalizations in the program.”
Same thing with medicare whilst Medicaid gets unfunded mandates
RE: But, but we were promised back in 1964!
Reminds me of the words of the song sang by Dionne Warwick:
Oh, promises, promises
This is where those promises, promises end
I don’t pretend that what was wrong can be right
Every night I sleep now, no more lies
Things that I promised myself fell apart
But I found my heart
Oh, promises, their kind of promises, can just destroy a life
Oh, promises, those kind of promises, take all the joy from life
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