Without policy changes, beneficiaries will receive only 78 percent of what was promised starting in 2034.
The fiscal crisis looming over Social Security is no longer a distant threat. The national pension system will be insolvent by the time workers now in their mid-50s are ready to retire. The annual report to Congress from the Social Security Trustees, released this week, paints a grim picture of an entitlement program that was already veering towards insolvency before the COVID-19 pandemic accelerated that trend. The Trustees now estimate that Social Security will be unable to pay the full amount of promised benefits by 2033, one year sooner than the same report estimated last year. Absent any policy changes, beneficiaries will receive just 78 percent of what they’ve been promised starting in 2034. The pandemic caused a spike in retirements, but the underlying issues with Social Security remain the same as they’ve been for decades: the math simply doesn’t add up. Social Security will see negative cash flow of $147 billion this year, and the deficits will keep adding up as the population ages and there are fewer workers paying into the system relative to the number of retirees collecting benefits. Last year, there were 65 million Americans getting benefits from Social Security, while 175 million people paid into the system via payroll taxes, according to the Trustees’ report. That’s less than three workers for every beneficiary, a near-historic low. Those deficits will eat up the Social Security Trust Fund over the next decade, and insolvency awaits. The trust fund itself is actually an accounting fiction—it contains nothing except IOUs that the government has written to itself over the years.
