Is America about to enter a Social Security crisis?
According to the 2019 Annual Report of the Board of Trustees, the answer is yes. The cost of paying for the Social Security program in 2020 will officially exceed funding, leaving the program with a significant deficit.
Think about it this way: if you’re on SS right now (or if you will be within a few years), you could find your payments being clawed back or even stopped, depending on how the next 10 to 20 years go. When there’s no funding, there’s no funding…
That’s a frightening prospect, isn’t it?
- Trustees report the deficit was reached for the first time since 1982. It will have long-standing consequences for current and future recipients, potentially even causing the end of the program within 30 years.
- The average cost per year of the Social Security program sits at around $1 trillion right now. In 2018 alone, trustees spent $988 billion on the program. The funds are split into two equal portions, the first for retirees and the second for people on disability.
- The program’s $2.9 million trust fund won’t save it, either, in case that’s what you were thinking. The deficit will force trustees to dip into it starting in 2020, and if nothing changes, the retirees portion will only last until around 2034. Trustees expect the disability funding to last slightly longer (until around 2052).
- Once the money runs out, trustees believe “legislative action will be needed to prevent reserve depletion.” But it isn’t ever really clear what this means; it could include skimming back on payouts or pulling money from other sources.
- Either way, it’s a dire example of a system that needs immediate change. The fact that Americans could be left with no safety net, even when they sorely deserve one, should be frightening to us all.
- In fact, even the trustees themselves indicate the direness of the current situation within the report. “The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way,” it reads, “in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them.
- As for what they believe needs to happen? “Implementing changes sooner rather than later,” they say, suggesting it “would allow more generations to share in the needed revenue increases or reductions in scheduled benefits.”
- The same report indicates that Medicare’s hospital insurance funds will officially run out in 2026, leaving thousands of Americans without care. The cost of providing Medicare is also slated to increase significantly year-to-year.