The social security administration has just reported that they needed to use the money in the “Trust Fund” in order to make payments for calendar year 2018. What does this mean? In short in means that there are more outgoing funds to the 60 million + recipients than money coming into the Social Security Administration from taxpayers. In other words, if the government collects X dollars from taxpayers, this means they are now paying out X+1 dollars.
This day was bound to come. With the population aging and more people hitting the retirement age of 62 and over, the demand on the federal government benefit system is increasing. This is not only true of social security payments, but also food stamps, Medicare and Medicaid as well as many others.
The fact is that there are fewer people paying into the system each year. According to the SSA, last year there were 2.8 workers for every Social Security recipient. That is down almost 20% from 2007, when there were 3.3 workers for every social security recipient. The trend continues to go down as well, with some experts predicting it could hit 2 to 1 sometime in the 2020s.
While there are various studies out there, the general consensus is that unless the system is shored up (either more tax dollars go into it or the retirement age is raised), then that means that the average social security payment may be cut anywhere from 20 to 25% by 2034. This data is according to the federal Government themselves too! That means every social security recipient will get ~20% fewer dollars in their check each month.
Other benefit programs are not in much better shape. Medicare will also need to be either cut or the program changed per the latest 2018 federal government reports. (We will write an article about that program as well at some later date.) Other welfare assistance programs are also under “stress”.
However any cuts to social security will be bound to hurt. Over 60 million Americans receive a monthly social security payment, and that number includes 45 million senior citizens. A number of those people have no other income coming in the door; they only live on social security. If the program is cut, it may cause them to go hungry, fall behind on their bills, and struggle in other ways.
If you are younger today, plan on social security paying out less money in the future and/or the retirement age being raised. Start saving now!