Social Security insecurity
POSTED: Thursday, January 27, 2011 - 6:13pm
UPDATED: Saturday, January 29, 2011 - 1:37am
Social Security is a victim of demographics. And I and Neal and every other baby boomer are the problem.
Our ultimate retirement will be a huge drain on a system that has been pay as you go…or at least it was…
When President Franklin D. Roosevelt signed the Social Security bill into law, America was mired in the Great Depression.
And now, the program is facing a crisis in funding.
The boomers are retiring, starting this year, and the country is in the worst recession since the 1930’s.
Put the two together and you get debt…
This year, Social Security will pay out more than it takes in. But the trust fund can still handle the load.
But, the Social Security Trust fund will be empty by 2037, but that does not mean payments stop. Even if nothing is done, the system will pay 75% of scheduled benefits.
The government has borrowed from Social Security in the form of government bonds.
There are other possibilities…
Raise the retirement age, but who will continue to employ a 70-year-old?
We can raise taxes on those still working.
Or eliminate the cap on contributions, which says that right now, only the income up to $106,000 is taxed. Removing that cap would extend solvency until the boomers have exited the stage.
The US budget is dominated by Medicare and Medicaid, defense and Social Security.
No budget cutting plan will succeed if any of those are off the table…period.