Another year, another bleak report on the future of Social Security.
This June, the Social Security Administration’s Board of Trustees updated numbers to show that the entitlement program is operating at a deficit that will bleed it dry by 2033.
The exact words of the trustees, according to the recent report, are as follows:
“The Trustees project that annual OASDI cost will exceed non-interest income throughout the long-range period under the intermediate assumptions. The dollar level of the combined trust fund reserves declines beginning in 2021 until reserves are depleted in 2033.”
The “assumptions,” of course, are just that — and they don’t take into account any changes to benefits or retirement ages that may be enacted in the intervening years.
But the report is bleak, as always, and should be seen as yet another call to action.
What’s more, The Heritage Foundation senior economic policy analyst Rachel Greszler claims in a recent report that Social Security could become bankrupt much sooner than the 2033 deadline cited by the program’s trustees.
For instance, reforms in 1983 to the program “guaranteed” SS would be sound for 75 years, through at least 2058. “Yet once again, the projected solvency of Social Security was too optimistic,” Greszler writes. “Ten years later, the projected date of insolvency moved up by 22 years to 2036. Now, 30 years after the 1983 reforms, the projected date of insolvency has moved up by 25 years to 2033. ”
Social Security is crucial for two reasons. The first is obvious — that lower-income seniors and disabled Americans need SS benefits to survive. But the second is that, even if you are heartless enough to think elderly Americans (and the disabled who also get benefits) should be left in poverty, it benefits the broader economy to have them spend a little more on groceries and gas and home repairs.
I know, I know … deficit spending that bankrupts our children yadda yadda yadda. But for a program like this with hard economic and social benefits, America needs to figure out how to pay for this program and keep it sound for many decades to come.
Check out these numbers from the SSA: At the end of 2012, benefit payments went to about 57 million people — 40 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 11 million disabled workers and dependents of disabled workers.
We need to fix this. Those people can’t fall through the cracks.
There’s no easy answer here, and some combination of more revenue and smaller benefits will have to be hammered out.
But given our intransigent Congress fighting over immigration and the broader federal budget, that doesn’t seem likely anytime in 2013.
Let’s hope they get their act together and can move on to SS soon — before it’s too late.
- Get the full details in the Social Security Administration’s 2013 report. (SSA.gov)
- Rachel Greszler’s take on how we need to be more urgent about this projected deadline based on history. (The Heritage Foundation)
- Chuck Saletta says making up for Social Security’s shortfall is easy. (The Motley Fool)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP.