Social Security turns 80 on Friday, and the massive retirement and disability program is showing its age.
Social Security's disability fund is projected to run dry next year. The retirement fund has enough money to pay full benefits until 2035. But once the fund is depleted, the shortfalls are enormous.
The stakes are huge: Nearly 60 million retirees, disabled workers, spouses and children get monthly Social Security payments, a number that is projected to grow to 90 million over the next two decades.
And the timing is bad: Social Security faces these problems as fewer employers are offering traditional pensions, forcing older workers to think hard about how they will afford retirement.
"This is a program that's been immensely popular since it began," said Nancy LeaMond, executive vice president of AARP. "Increasingly, people recognize that saving for retirement is becoming harder and harder, and Social Security is becoming even more important."
President Franklin Delano Roosevelt signed the Social Security Act on Aug. 14, 1935. Here are things to know about the federal government's largest program on its 80th birthday: (...)
How big is the long-term problem?
The numbers are beyond comprehension.
Social Security uses a 75-year window to forecast its finances, so the projections cover the life expectancy of every worker paying into the system. Over the next 75 years, Social Security is projected to pay out $159 trillion more in benefits than it will collect in taxes, according to agency data.
That's not a typo.
Adjusted for inflation, it comes to $35.3 trillion in 2015 dollars. That's nearly twice the national debt, which took the entire federal government 239 years to accumulate.
Did Congress already spend the trust funds?
Yes. For much of the past three decades, Social Security produced big surpluses, collecting more in taxes than it paid in benefits. Social Security invested those surpluses in special U.S. Treasury bonds, which are backed by the full faith and credit of the U.S. government.
They are now valued at $2.8 trillion.
But as Social Security was generating surpluses, the rest of the federal government was running deficits, for all but a few years around the turn of the century.
To finance deficit spending, the Treasury borrowed from the public and from other federal programs, including Social Security.
Social Security's disability fund is projected to run dry next year. The retirement fund has enough money to pay full benefits until 2035. But once the fund is depleted, the shortfalls are enormous.The stakes are huge: Nearly 60 million retirees, disabled workers, spouses and children get monthly Social Security payments, a number that is projected to grow to 90 million over the next two decades.
And the timing is bad: Social Security faces these problems as fewer employers are offering traditional pensions, forcing older workers to think hard about how they will afford retirement.
"This is a program that's been immensely popular since it began," said Nancy LeaMond, executive vice president of AARP. "Increasingly, people recognize that saving for retirement is becoming harder and harder, and Social Security is becoming even more important."
President Franklin Delano Roosevelt signed the Social Security Act on Aug. 14, 1935. Here are things to know about the federal government's largest program on its 80th birthday: (...)
How big is the long-term problem?
The numbers are beyond comprehension.
Social Security uses a 75-year window to forecast its finances, so the projections cover the life expectancy of every worker paying into the system. Over the next 75 years, Social Security is projected to pay out $159 trillion more in benefits than it will collect in taxes, according to agency data.
That's not a typo.
Adjusted for inflation, it comes to $35.3 trillion in 2015 dollars. That's nearly twice the national debt, which took the entire federal government 239 years to accumulate.
Did Congress already spend the trust funds?
Yes. For much of the past three decades, Social Security produced big surpluses, collecting more in taxes than it paid in benefits. Social Security invested those surpluses in special U.S. Treasury bonds, which are backed by the full faith and credit of the U.S. government.
They are now valued at $2.8 trillion.
But as Social Security was generating surpluses, the rest of the federal government was running deficits, for all but a few years around the turn of the century.
To finance deficit spending, the Treasury borrowed from the public and from other federal programs, including Social Security.
by Stephen Olemacher, AP | Read more:
Image: AP
