Social Security Going Bankrupt
February 1, 2011
Social Security will post nearly $600 billion in deficits over the next decade as the economy struggles to recover and millions of baby boomers stand at the brink of retirement, according to new congressional projections. This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. That figure swells to $130 billion when a new one-year cut in payroll taxes is included.
- In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising.
- In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.
- More than 54 million people receive retirement, disability or survivor benefits from Social Security with monthly payments averaging $1,076 per person.
The deficits add a sense of urgency to efforts to improve Social Security's finances. For much of the past 30 years, Social Security has run big surpluses, which the government has borrowed to spend on other programs. Now that the program is running deficits, the federal government will have to find money elsewhere to pay back Social Security, so it can continue to issue benefits.
- Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s, but the surplus has been borrowed over the years by the federal government to spend on other programs.
- Benefits will be safe until that money runs out, which is projected to happen in 2037.
- At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.
Source: Stephen Ohlemacher, "Social Security Posting $600B Deficit over 10 Years," Yahoo News, January 27, 2011.
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