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.
I believe it’s because of an Obamacare “feature” that throws a surcharge on medicare deductions based on income. We had a minor one off windfall in 2018 which put us in the range.
Social Security IS a welfare program, sold to the voters as an old age pension by FDR ...
Eisenhower could have painlessly saved us from FDR’s high handed lawlessness but he chose to honor the man and not the oath of office or the Constitution, by rubber stamping FDR’s domestic legacy he shares equal responsibility for the ruin that is coming and has been coming just as a cancer starts small and then grows to threaten the whole body.
Why are people getting social security checks after age 105? Because there is no fool-proof mechanism for social security to know when the beneficiary dies. There are people over age 120 still getting checks!
SS funded by IOU’s.
“reduced my wife’s and my monthly payment $70 clams each.”
I think the cost of Medicare has gone up. Maybe that’s why your check is less. Also the deductible has increased. But you should have gotten a notice of your 1.6% cost of living increase to your check. Just don’t spend it all in one place.
It was always doomed to eventual failure. It was a Ponzi scheme from day 1
They have purposely inflated the value of the dollar down enough to be able to pay the benefit amounts they promised while the stupid among us don’t realize that the value of what they are providing has been cut considerably.
SS is not a welfare program. You should research it sometime.
We should learn from the Chilean model and copy it.
Smart people copy what works, dumb people believe more in their own opinions.
“There’s a reason people call them “entitlements”
LOL!
I am 73. My SS payments have been an interest-free loan!
Remember all the fuss about Enron? Politicians are responsible for this one. Good luck holding them responsible.
Not really. A Ponzi scheme is voluntary, hoping for a 50% return on an investment in three to five months whereas SS is mandatory and you don’t realize the benefits until you can claim them at retirement.
I took it as soon as I could since you just never know. I believe the offset of waiting for full benefits and starting early was something like 12 years for me. Would have been nice had the system not been robbed.
Social Security was designed as a purely Democrat vote getting Ponzi scheme from the start, and thus is not intended to be financially sound.
The Congressional Record shows the Republicans at the time arguing these points when Social Security was debated in the House.
It’s exactly a ponzi scheme.
Current income is used to pay past investors. The investor pool has to continually expand, or the scheme collapses. That is exactly how SS works.
And here’s no such thing as a SS “trust fund”, It’s a pile of IOU’s the government owes itself.
We have millions of foreigners that have never paid a dime into the system that are getting benefits.
REPUBLICAN HINT:
Ban all property taxes for Social Security elders.
Since 80% to 99% of property taxes is just a pension grab for unions, this would solve two problems with a single pen.
:-)
Sell it as opposing greedy cadillac fat union bosses, funding through SS,
or sell it as compassion for Grandma, prevent booting her out of home.
Union bosses are kicking Grandma out on to the street.
The problem is that much of the Baby Boom (the commie-indoctrinated 1960s morons) views everything as a zero-sum game. Once they (well, we) are all dead, which will be in a surprisingly short time, Social Security will have survived its worst crisis and be back to what passes for normal.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.