Will Social Security Be Around in 75 Years?

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Social Security now spends more money than it takes in each year, which casts doubt on the future of your benefits. Some people fear that the program will disappear before they ever see a penny. This attitude is especially prevalent among Millennials and Generation X, who have to wait the longest to claim benefits. But are they right?

Not exactly. Although the Social Security situation is serious, it is not as bad as some people think. Here’s a look at your full 75-year Social Security forecast.

Image source: Getty Images.

The Source of Social Security Funding Problems

Social Security works on funds from three sources:

  • Social security payroll taxes
  • Interest earned on money in the program’s trust funds
  • Social Security benefits

Social Security payroll taxes provided $838.2 billion for the program last year, by far the largest portion of its funding. The current tax rate is 12.4%, split equally between employee and employer. Everyone pays for this from at least part of their income. In 2022, the government will tax the first $147,000 you earn, and by 2023 this will increase to $160,200.

The government also taxes some seniors’ Social Security benefits if their income exceeds certain thresholds for their tax filing status. How much they owe depends on their income and their tax bracket for the year. In 2021, this brought in approximately $37.2 billion for the program.

These two sources of funding for the program are not going anywhere, and Social Security taxes may actually increase over time. The requirements for who owes these taxes haven’t changed in years, and as the average Social Security benefit rises, more and more seniors are likely to pay them.

The real problem for Social Security is the interest on the trust fund. In 2021, it was the program’s second-largest source of funding, accounting for $67.5 million. In the past, the huge baby boom generation paid a lot in Social Security payroll taxes, which brought in a lot of money for the program and kept the trust funds strong. But now all those baby boomers are retiring and there are fewer workers to replace them. So the government has had to use the money in the trust funds to make up the difference, and now it’s running out.

What will social security look like in 75 years?

In the coming years, social security will remain business as usual. According to the latest Social Security Trustees Report, the program has enough funds to pay out all eligible individuals in full until about 2035. But after that it starts to go downhill.

The program can only pay out about 80% of its planned benefits going forward. And this will gradually decrease to 74% by the year 2096.

There is good news and bad news here. The bad news, of course, is the threat of benefits. But the good news is that even in the worst-case scenario, you still get something from Social Security. The Trustees Report shows no forecasts beyond the year 2096, but the fact that it could pay out 74% of its planned distributions in that year suggests that even then it will be far from completely disappearing.

But a lot can change

The above scenario is what is expected to happen if the government does not make changes to Social Security but is aware of the funding crisis. Many congressmen want changes to be made to keep the program sustainable for generations to come, but they are not yet in agreement on what those changes should be.

The Social Security Trustees report suggests a few possible solutions, including:

  • Increase the Social Security payroll tax rate by 3.24% (or as high as 4.07% if the government waits until 2035 to do so)
  • Reduction of benefits by 20.3% for all current and future beneficiaries (or even 24.9% if the government postpones it until 2035)
  • Reduction of benefits by 24.1% for everyone who registers for Social Security in 2022 or later

The government may also choose to use a combination of these strategies, or make additional changes, such as raising the full retirement age (FRA), which determines when you’re eligible for your full benefits based on your work history. . Claiming under this age is still an option, but it will reduce your monthly benefit.

Whatever happens, some people are likely to get upset, and it’s even possible that seniors will still see benefit cuts even if they’re not as steep as the ones mentioned above. If you’re concerned about this, consider relying more on your personal savings and Social Security benefits plans that are about 25% less than you would qualify under current Social Security rules. Stay on top of any changes the government makes to the program so you can adjust your retirement strategy as needed.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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