With 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?