According to a new report from the trustees that oversee Social Security and Medicare, the Social Security disability trust fund will run out of money sometime in late 2016. If nothing is done by Congress before then, an automatic 19 percent reduction in benefits will go into effect. That would impact 11 million Americans who presently receive Social Security disability payments.
According to the report, the Social Security system as a whole, which will be 80 years old this year, is also now on pace to run out of money in 2035, while Medicare, which is now entering its 50th year, is set to become insolvent in 2030.
The biggest problem facing these programs is the demographic shift happening in America right now. More and more baby boomers reach retirement age every day, with fewer and fewer working-age adults left to support these major entitlement programs. More than 10,000 Americans reach the age of retirement every single day, with that trend expected to continue for about the next fifteen years.
According to the Mercatus Center at George Mason University, in 1945, there were 41.9 workers per Social Security beneficiary. By 2010, that number had sunk all the way to 2.9 workers per beneficiary, with the number expected just to be just 2 workers per beneficiary by 2030.
Many experts have suggested several different solutions to save Social Security from becoming insolvent, such as transitioning to private accounts or raising the age of retirement. No matter what the solution, clearly something needs to be done soon so that our generation doesn’t get stuck paying into a system for our entire working lives, only to have it run out of money just as we are getting ready to retire.
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