FDR should have thrown in some calculators, because the SSA is running out of money. Image from Wikimedia Commons.
Pundits and forecasters of doom and gloom have been saying Social Security is going to run completely out of money for some time. For this year, they’ll be right. The Social Security Administration will pay more than it will collect. This is not the first time Social Security has run in the red, either. The SSA flirted with insolvency in the early 1980s. Social Security maintains a trust fund where it holds all funds, and shortfalls are exactly what the fund is there to counteract.
Social Security payments to exceed income
The Social Security Administration will take in less for this year than it is due to spend, according to the Los Angeles Times. The trustees of Social Security and Medicare released a report on Thursday, August 5, that reveals Social Security has more payments to make to Social Security recipients than funds it is due to collect by the end of 2010. After the new health care reform bill passed, Medicare was expected to stay solvent until 2029. Medicare had previously been given until 2017 before it fell into insolvency. New incentives and regulations are expected to streamline Medicare spending without compromising how much it delivers to citizens receiving benefits.
Social Security: The ultimate trust fund baby
The Social Security Administration maintains a trust fund for itself. Tax income that’s left over after expenditures goes into the trust fund. Any shortfalls that occur are covered by the trust fund. The fund itself was created for exactly this purpose. According to the New York Times, the Social Security Trust Fund is not in danger of running out until 2037. The commissioner for Social Security, Michael Astrue, has projected that if it does, the Social Security Administration will still be able to meet 75 percent of its payment obligations.
Not enough Peters to pay for Paul
Social Security depends on tax revenue. The fewer people that are working, the fewer dollars it receives. As people live longer lives, the amount that has to be paid out increases, and therefore so do the obligations the SSA has to meet. The budget deficit that Social Security will run by the end of the year won’t affect anyone’s benefits, though, as any shortfalls do have the trust fund to fall back on.
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