Retirement & Financial Planning Report

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The latest official report of SSA finances does not show a problem beyond repair, an outside assessment has said, although adding that the problem will not solve itself.

The annual report by the SSA program’s trustees has drawn more than the usual amount of attention for its projection that within a year, the outgo will exceed the income from payroll taxes and interest credited toward the trust fund, which consists of Treasury securities standing to the program’s credit. Another eye-catching figure, the Center for Retirement Research said, is that the program has a 75-year obligation to pay out $13.9 trillion.


However, it added that the program’s structural problems have been known for decades, related as they are to well-known demographic trends—most notably the aging of the baby boom generation that is increasing the number of people drawing money out of the system and the smaller generations behind them to pay into it.

Since 2010, the program’s outgo has exceeded its income from payroll taxes but the effect of interest credited to the trust fund has meant that the fund has not been drawn down. The trustee report projects that after the drawdown begins next year, the fund will be exhausted in 2035.

“The depletion of the trust fund does not mean that Social Security is “bankrupt.” Payroll tax revenues keep rolling in and can cover 80 percent of currently legislated benefits initially, declining to 75 percent” over 75 years, the study said.

“The changes required to fix the system are well within the bounds of fluctuations in spending on other programs in the past,” it said. For example, since the long-term deficit comes to 2.78 percent of covered payroll earnings, “if payroll taxes were raised immediately by 2.78 percentage points – 1.39 percentage points each for the employee and the employer – the government would be able to pay the current package of benefits for everyone who reaches retirement age through 2093,” it said.

“Stabilizing the system’s finances should be a high priority to restore confidence in our ability to manage our fiscal policy and to assure working Americans that they will receive the income they need in retire¬ment. The long-run deficit can be eliminated only by putting more money into the system or by cutting benefits. There is no silver bullet.”