How Long Will Social Security Last?

how long will social security lastWith an increasing older population, recession and growing national debt the question of “how long will social security last?” is a very important one to worry about. Especially if you are on the younger side of the age scale.

Advances in medicine and health technology and a general growth in population means that more and more retirees are drawing their social security checks every year and the taxes of the young are getting closer and closer to having to pay those checks right away rather than being stashed to pay their own social security.

How long will social security last, the estimates:

It’s impossible with all the millions of factors to give an exact date for the last social security check to be paid but estimates make one thing clear. Without some serious reform SS will be gone or seriously compromised within many of our lifetimes. This is a major issue as people are trending towards retiring with debt rather than savings. In face it could cause devastation in the long term and who knows it may bring waves of poverty and desperation throughout USA bigger than every before…. But let’s not get all apocalyptic about this, the problem is being identified so maybe a viable solution will be worked our!

In 2003 Social Security Online released a press release entitled “Social Security Not Sustainable for the Long Term” and they outlined many problems of the current system. Here are some of the important main points of the release:

  • It is projected that tax revenue will fall below program costs in the year 2018
  • The SS trust fund (that will be used to keep the system going) will be depleted in 2042
  • The trust fund would require another $3.5 trillion in today’s money (2003) and earning interest at current rates (again 2003) to pay all benefits for the next 75 years
  • Current benefits are not affected but without action now our young people’s entitlement to benefit will not be possible

More recent news has suggested that tax revenue will fall below program costs in 2016 and the trust fund will be depleted by 2037. Each year the figures are getting closer and closer. It would not be unreasonable to predict that the fund may actually run out in 2030, just 20 years from now if nothing is done.

What can be done to save social security?

The most obvious answers are not popular at all. Number 1, raise taxes to build up the system again. This is a more or less no, no for Obama’s admin as they are already under heavy fire over taxes. Number 2 is to decrease benefits. In an economy where things are raising in price this option simply does not compute!

People have a right to their social security as they paid it. Even if you are earning a billion dollars a year off of interest and investments you still have a right to that $1000-$2000 check every month. It’s your own forced savings plan in many ways!

In our current system getting rid of social security does not work out.

Maybe it could be moved to a private system (although I am opposed to the idea of people profiting from social systems like this) where you are encourages to add extra funds when you have them. Like a cross between a pension and social security taxes. The privatization of social security is possible in USA (wouldn’t happen easily elsewhere) but it scares me half to death to think of it.

Maybe some serious pruning is needed. Benefit fraud is rife and many people do not need or deserve the money they take. It may cost a little more short term but hiring investigators and really looking into where people are spending money and how they are getting it may allow a lot of dead leaves to be chopped from the ever growing SS plant, it needs more food every year so less dead leaves will help it work. Is this idea too intrusive?

Maybe it should be allowed to die. People can be made aware of this early and encouraged to save for their retirement…. Obviously this is cut throat and could cause all sorts of protests and problems for whoever is in government. Especially if people are being forced to pay tax for a current generation.

I really have no idea for a viable solution and not being a US citizen I will never be able to collect my SS at retirement anyway. Who knows how long will Social Security last in the UK (my home country)? It doesn’t look goo there either!

I must admit that without such a secure social security for people when they retire that they may be turning to other means to keep money floating such as reverse mortgages (check out some of the reverse mortgage pitfalls from Mike at Saving Money Today), taking on work way into their 70s and even living way below the lifestyle they were always used too.

How would you save the social security system?

35 thoughts on “How Long Will Social Security Last?”

  1. I have heard about the pending bankruptcy of Social Security my whole life. It is definitely not a new problem, but I am not seeing any new solutions to fix it.

    I get mad when I think about all the money my husband and I have put into the system and hear that there is a chance we may never see a dime of it. It’s frustrating because we had no choice but to contribute. If it’s gone or greatly reduced by the time we hit retirement age, then we better get a heck of a tax deduction since it will basically have been a charitable contribution.
    Everyday Tips recently posted..Thoughts For Thursday- Watching Everyday LifeMy Profile

    1. It is a maddening thought! I think the UK ran out in the 70s or something but have been paying out from other means! No idea how it’s working!

  2. I personally believe that social security needs to go. First of all, it was never set up as a savings account. It was setup so that the workers of today pay off the investors of times past.

    When Bernie Madoff did it, it was called a ponzi scheme.

    I’ve heard that if the government does nothing, future workers will still get 75% of what they paid in (I suppose that is not inflation-adjusted).

    People in the future are going to be living much longer, healthier lives than those of today. SS has become nothing more than yet another entitlement instead of a “keep the old people from starving” which it should have stayed. I would recommend ramping it down so that people get what they paid in, but they cannot contribute anything further and increase their future payouts.

    I would also recommend de-monopolizing the monetary system so that it was not so reliant on debt and inflation and so that so much wealth did not flow to the financial sector, forcing people to chase risky assets to get a decent retirement…
    Kevin@InvestItWisely recently posted..How Much of Your Paycheck Do You Need to SurviveMy Profile

    1. The biggest worry I have is that if people are left to save for themselves and it’s voluntary then people just may not save…. always meaning to do it next week.

      Imagine 20% of the population suddenly has no savings and they hit retirement, they get too sick / old to work properly and can’t survive and are getting no SS or pension…… A developed nation cannot just let those people die and without SS there will be no where for the money to come from.

      I just don’t think people are responsible enough and it’s inhumane as a nation to work on the Survival of the Fittest mantra!

      1. Forest,

        It will have to be changed gradually. I agree that people that fully expected the government to live up to their promises should receive their payout, but we should look at ending the system, especially given how lifespans and health are increasing, and SS was originally meant as a stop-gap measure rather than as a welfare system.

        I think it’s even more inhumane to expect the youth to carry on an ever-increasing load and become virtual slaves to carry on a ponzi scheme. Let the system go, gradually, I give you that, and people will learn to save for themselves, once again. I don’t agree that it’s the government’s job to be our “parents”, since the government is just run by humans that may be just as irresponsible, in fact even more so, since they are using other people’s money.

        I am not against keeping a base system to keep people from starving and such, though in the long run I would prefer to see people look after their own parents or charities to fill in the gap. In Canada we have Old Age Security which complements the other pension systems.
        Kevin@InvestItWisely recently posted..How to Take a Frugal Vacation in ParadiseMy Profile

        1. My main priority is that no one should die from lack of basic standard of living. I think this means a base ss and base healthcare (social medicine) that will not force people into a life of debt if they have to use it…. We all need to be able to live without those fears to florish to our potential…. I’m kind of with you on what you say.

  3. I have to agree with Forest in that given the freedom to save for your own future, the majority of people would not do so. I have no number to back it up, but I would guess that a number of people start thinking of retirement (and subsequently how much cash they have in the bank) at around age 55.

    I throw this number out due to the fact that the majority of boomers will remember the Freedom 55 commercials, and at age 55 will ask themselves why they aren’t living on the palm beaches that those commercials promised.

    I don’t know where Forest is from, but I hope he’s not American. As for you and me, Kevin, I would say we don’t have THAT much to worry about. From what I’ve read, Canada dealt with the population cohort issues a while back.

    The States, on the other hand, seems to have a social security system filled with IOUs from the government… and that should leave every American “seriously in need of a drink.”
    Myke@In Search of Salt recently posted..The Salt Shaker- ETFs- Carnivals- and Trade CommissionersMy Profile

    1. Hey Myke, thanks for your comment….. I’m British but not sure our system will be around when I retire….. Will have to fend for myself it may well turn out!!!

  4. Not a citizen? If working in the USA, the author is still eligible, as long as he/she works 40 quarters or more under the SSDI program. But if not working in the USA, what gives the author the expertise to discuss or the right to oppose any given solution? If Social Secutiry were JUST a retirement program, it would be solvent – but it has been perverted by legislators to do social engineering. Adopted kids get social security – even if adopted from China – until they are 21. Disability payments are now a significant part of disbursements.- it was not always so.

    Finally, families have disintegrated – time was when grandpa and grandma moved in with the kids, did the baking and school lessons with the grandkids, knit sweaters and made toys. No more – we are emancipated!

    Times will come when we run full circle – Social Security will be means tested and awarded only to Democrats, and there will be grandma, baking pies and making cookies, watching the TV while knitting, and grandpa will be out in the shop or the yard, puttering, gardening and generally having a great life.

    1. Hey Jason, I don’t live in USA either so definitely not eligible myself. It’s my website so I can discuss whatever topics I feel like….. I give my opinion and then enjoy feedback from comments. Not telling anyone to do anything in this post.

      I don’t really fully understand what you are talking about to be honest. I highly doubt social security will ever be dished out based on political leaning!

      1. As a 57 year old working American,I have come to a few realizations about the future and health of Social Security right here in the U.S.A. Solutions,although not exactly simple in nature,are stark in the reality that we will have to increase payroll taxes and police the rolls for those that should not receive any or a partial amount of their entitlement. Taxes to cover the depletion targets woul have to be in the 1 to 2% range to replenish and maintain the system exponentially. The chief question then becomes whether Washington has the courage and wisdom to step up and give the American people the bad news. Letting this albatross unresolved only makes future solutions more difficult. Let’s swallow the bitter pill of increased payroll taxes now to keep the system solvent

        1. Hey Tom, I feel like something along those lines could work but the backlash from the public would be awful and possible enough for a government to get voted out. It’s such a hard game to play!

  6. “increase payroll taxes”

    If one wants to keep the current level of SS benefits, then taxes will have to be raised, but increasing payroll taxes is a job destroyer and hurts the young. Many people are pissed up here in Canada at the “conservative” government for doing the same instead of finding another way of raising taxes that does not hurt jobs as much.

    1. I’ll be honest I really don’t know the solution to this whole mess. If it became private then it could become exclusive and the governments would have to find a way to prop up the poorest people without the cash coming from the working folks….. I have no idea how to fix it as can’t be having people dying of poverty!!!

      1. SS was enacted as an insurance against “living too long”. The average age at death was 68, so retirement really didn’t mean the same thing then that it does today.

        It doesn’t take many resources to prevent people from dying of poverty. If that’s all SS was supposed to do, there would be no funding problem. The problem is that many people have come to rely on SS to take care of everything, and that money was spent ages ago. I think the young are going to have to get used to the idea of saving for themselves again. It is fair for people to get out what they paid in, but it’s not fair to expect the young to shoulder an ever increasing burden just to keep a ponzi system going.

        1. Sure I understand that but most people do pretty much get back what they pay in but the people who don’t pay anything eating away at the edges of the system may be really responsible for killing it…..

          Maybe a private savings system would work but a separate tax would have to be put in place, let’s call it survival tax! I do think the ss system could be cleaned up a lot by really combing over and ejecting people who are falsely claiming but i know in USA that could be a problem as people would claim invasion of privacy… Such a difficult thing to work out!

  7. The problem with SS is not only that we have more elderly people drawing benefits, but that the government has been using the general SS funds to finance other issues. What is needed is for the politicians to address the problems of the national debt and SS by reducing overhead spending. Reduce the military, smaller congress, smaller state and local government, and spend the taxpayers money as needed for infrastructure improvements. Our rail systems are so outdated that they are embarrassing. We need high speed rail systems such as China – 300mph run from Behjing to Shanghai for example. Conversion from petroleum based economy to that of Solar, electric, wind, etc. – over time, and thus slowly ween ourselves of dependence on foreign oil. Stop giving out life sentences to those individuals, such as Charles Manson, who should have received the death penalty, AND put to death for his crimes. This would reduce prison populations and thus another way to save taxpayer money. Impose import tariffs on goods manufactured outside of this country, and keep Americans at work. Stop the illegal aliens from crossing the borders, and deny them SS benefits, or Welfare to for that matter. By the way, how is the welfare system financed in this country? Seems to me that this is another issue that should be addressed. Just to name a few ideas…

    1. Hey Helpful Hints, very interesting comment and thanks for joining in.

      In many ways I agree with you and that the funds should never be diverted elsewhere. I’m not sure about smaller gov and disagree with death penalty 100% but fully understand why someone like Manson would be better not on this earth. Smaller miltary, absolutely 100% agree.

  8. I think a lot of people have their head buried in the sand with talk about getting rid of Social Security, the younger generation having to adapt and save more and all that. I say that from my own experience in life. I’m 50 years old, military vet, served 6 years, never married and no children, house paid for, worked in the same trade since military.
    I’ve always tried to conserve cash. Never owned a new vehicle. I purchased the 1989 pickup I drive used in 1994. Still driving it. I’ve never had a job that allowed me to take advantage of a 401-K but I invested in mutual funds, a IRA, and also have a brokerage account. Thought I was well on my way in the late 90’s but the past decade has been nasty. 2009 was a bad year employment wise for me. I got a glimpse of how much one might need to retire with a 20 year or more survival rate ahead of them. I will be there no time soon. Unless I were to live in a tent.
    Anyway, that being said, the opportunities are slipping away in the USA. Job outsourcing began in the early 1970’s. Guess it climaxed sometimes in the 2000’s, judging from our current situation. This idea that younger people can fend for themselves is BS! The jobs won’t be there. Everybody can’t be a Doctor, Lawyer, or Rocket Scientist. (Oops, that last one might be short lived!). All the one time good manufacturing jobs are gone. They went away because overseas potential labor was so cheep it justified building factories overseas and canning people here.
    When will this jobless non-recovery end? When the Chinese and Indians live like we us to and we live in mud shacks working for crap, then it will make sense to rebuild factories in the USA, thus starting the whole thing over.
    Meanwhile don’t expect the average US Citizen to be in the position to replace Social Security.

    1. Hey Mike, That is a very interesting comment. I agree that social security is needed and most people won’t be able to get by without it.

  9. Hey Forest,

    What do you mean SS will be depleted by 2037? There is no big pile of money sitting around anywhere. When the Gov’t TAKES our SS taxes they spend it that year, and then write an IOU to themselves. So if 2016 is the year when payouts exceed the taxes coming in… then, at that point SS, is bankrupt!

    Don’t worry though because the Gov’t will simply print up some money to cover their debts, so everyone will get their SS checks… problem is that with all this money printing there will be lots of inflation so your SS check won’t buy you much :-(

    1. Hey Steve, I think it’s cash from the trust fund that will keep it going but you know you are probably right! With inflation it will be worthless money.

  10. Ladies & Genlemen:

    Lets get Congress to take the same proportionate deduction in spendable income, the same loss of
    benefits, the same loss of home value and stock
    portfolios as the majority of the U.S. citizens. Lets’
    have all the CEO’s in the financial sector pay back
    all the money that was “unearned” and perhaps
    “illegally” obtained. Lets’ stop importing everything.
    Maybe we could even consider not paying Social
    Security benefits of any kind to non-American citizens.
    Lets’ take all the money from these suggestions, add
    to a balanced budget, replace the “borrowed funds”
    and stick all back into Social Security. Uhmmm????

    1. Hi GrandmaV, I don’t know about pulling SS from “any kind to non-American citizens”. The USA was built on immigration and it’s still needed. Most of these people contribute so they don’t deserve to be pushed out.

      As for CEO’s and the like, yes they need to be investigated and the rich/poor gap should be closed up somehow. The banking crisis was just a sad sad thing especially as they are all back to getting huge bonuses.

  11. Keep ss for retirement only. No ssi. No ss for illegal immagrants. SS for only workers who have paid into the ss program. No double dipping with the plan.

    1. Hey Bob, we need some social assistance for disability and other things. I don’t know that SS ever goes to illegal immigrants anyway, correct me if I am wrong!

      1. retired at 661/2 years old, saw this coming 20 years ago. when i looked for a job 38years ago,i saw to it that i got a job that paid the average. had insurance and a 401k . did my job the best i could. when the boss wanted some thing done that may have been wrong i did it . 20 years ago i quit taking go away vacations and put that money in my 401k. i did not move to other jobs that would pay more an hour,because i thought it was smarter to stay with the benefits .i retired in jun. of 08 and of course i lost a third of my retirement .i can still live comfortably even with the loss. there no way where i live you can live on ssi alone .i live in d.c. metro area .

  12. Social Security insurance benefits need to be cut. Taxes can’t go higher. SSI needs to be looked at the same as term life insurance. You have to die to get a payout. In order to recieve SSI benefits, you need to fall below an income/asset value. Our constitution and the US moral compas was intended to protect the rights and freedom of the weakest from the largest and more influencial. To make all individuals equal in voice and opportunity. Our morals guide us to help the less fortunate in health or fortune.

  13. First aren’t we talking about todays figures?? We don’t know what lies in the future do we?
    How about more jobs so people can FUND S.S..
    How about paying min. wage to tipped personnel.
    How about increasing Min wage to $10/hr.
    How about increasing the limits.
    This is all about more profits for business because instead of 6.2% from emplyoee. 6.2% rom employer, it’s 12.4 RIGHT TOTHE BOTTOM LONE!!

  14. Ahh Ponzi schemes.. oops I mean social security
    like those other pyramids , this too must fall.

    A self directed social annuity that only pays you back after a certain age , and is able to be passed to a spouse or dependent children , is my personal idea

    its got its pitfalls,but if its directed by your own contributions to it, and the government guarantees a % payout in case of disability or death, I would be for it.

    Of course the government would use that money you put in while you are awaiting your golden day, so who knows how well they would manage that.

    I’m guessing , if its not in your own brokerage/retirement account, then they will waste and spend it away.

    Blessings on planning retirement

  15. Thanks everyone for your ongoing comments and thoughts, some very interesting conversations coming out in the comments here.

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