A recent Gallup poll shows that 8 in 10 people believe the social security system will run out of money.
An Extremely Worrying Situation for Many
41% of those who express anxiety about the social security crisis are reported to be ‘extremely worried.’
College Grads, Upper-Income Class Most Optimistic
Of the Americans that were surveyed, high-income earners were the most optimistic. Predicting that they will have enough saved up to live comfortably in retirement.
Reasons for the Uncertainty?
The reasons Americans give for their concern are multifaceted. Some express doubt about the government’s ability to manage the money in the system. Others worry if the money will be enough to go round with the number of beneficiaries living today.
An Aging Population
In 2022, Social Security spent $147 billion more than it brought in. The reason is not too difficult to see; more people are retiring and living longer than the system produces.
The 2033 Conundrum
The dependency ratio dilemma is expected to reach a critical level by the early 2030s when those above 65 will outnumber those below 18 for the first time in US history. It is also the period that the Social Security trust fund reserve is projected to go bust.
What Happens If the Well Runs Dry?
68 million Americans receive social security each month. This could mean multidimensional poverty for most of them who depend solely on this check.
Deeper Poverty for Millions
“Not only would it increase poverty, it would deepen poverty for those already in poverty,” said Nancy Altman, the president of Social Security Works, an advocacy group for the benefits program.
Forced Sacrifices and Lifestyle Changes
“You would really have to curtail your expenses. You might have to move; you might not be able to afford rent and have to move in with someone who can take you in, like your adult children,” she added.
Low Earners Hit the Hardest
Social Security, being a progressive system, means benefits paid to low-income earners represent the larger share of payouts. If Social Security were to run out of money, low-income earners would bear the brunt of the impact.
Inflation’s Double Whammy
Rising inflation is not making it any easier for beneficiaries. As the cost of living increases, the purchasing power of their benefits diminishes, making it harder to cover basic necessities like food, housing, and healthcare. For many, this means stretching already limited resources even further.
Could Social Security Really Run Dry?
In all of this, how feasible is it that Social Security would run out of money by 2033? With things going as they are, it seems more likely by the day. But that does not mean it will.
Economic Upturns Offer a Glimmer of Hope
The good thing is that the recent economic improvements have helped push the depletion period forward.
Social Security Gets Two More Years
A report released in May by the Social Security Board of Trustees now projects 2035 as the time the trust fund will be depleted. An increase of two years from what was initially predicted.
Economic Recovery Not Enough
Even with this extension, it’s not all smooth sailing as retirees will only receive 83% of their full benefits, a significant cut for those who have planned every penny of their paycheck.
Finding Solutions
Solutions have been put forward by Democrats and Republicans to resolve the emerging Social Security insolvency.
The Democrat’s Plan to Secure Social Security
Bernie Sanders and some House Democrats, including Elizabeth Warren, proposed a bill to resolve the emerging social security insolvency for 75 years. The bill also expands Social Security benefits by $2,400.
Raising the Retirement Age
On the other hand, Republicans suggest increasing the retirement age to 70. This proposition has not been well received, as three out of four Americans oppose it, according to an AP-NORC poll.
Is There Really a Cause for Concern?
The Social Security Administration is confident that the crisis will be resolved before 2035. Lawmakers have stepped up to shore up the program’s finances; this would not be any different.
Time to act Now!
Experts say the solvency issue with Social Security should be addressed now rather than later. “Congress has a responsibility to sit down and work this out in a bipartisan way, and the sooner they do it, the better.” said Bill Sweeney, Senior vice president – Government affairs at AARP.
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