The government now says that Social Security finances have worsened dramatically, which will reduce the life of the supporting trust funds by 2033. This is three years earlier than previously forecasted.
Here’s the government’s report. The key points:
• Timothy Geithner: “Social Security’s retirement and disability programs have dedicated funds sufficient to cover benefits for the next 20 years, but in 2033, incoming revenues and trust fund resources will be insufficient to maintain payment of full benefits.”
• Total expenditures in 2011 were $736 billion. Non-interest income was $691 billion.
• Geithner: “The projections in this year’s report are somewhat more pessimistic than last year’s projections.”
• The Social Security Disability Insurance trust fund will run out in 2016. That’s two years earlier than earlier forecasted. The Social Security trust fund to retirees will be out in 2036 — also two years earlier. COMBINE THEM, and the trustees project the trust fund as a whole runs out in 2033.
• A full 1 million more people got Social Security benefits last year than in 2010.
• Workers paying taxes per Social Security beneficiary will drop to 2.8 workers per beneficiary in 2012, from 3.4 in 2000.
NOT A PRETTY CHART:
Social Security costs the country $700 billion a year NOW and the unfunded liabilities by 2050 are staggering. Medicare is similar. Together, the costs of Social Security and Medicare ALONE amount to nearly two-thirds of all Federal tax revenues.
The basic problem is that the era’s mathematics were created in an era when the average family size included four to five children, who it was assumed would grow to fund their parents’ pensions via expansion of the tax base. Now the average is two.
– Andrew Hall