Social security cash reserves could be cut to $ 1.35 trillion in 8 years
Social security cash reserves could be cut to $ 1.35 trillion in 8 years

Social security cash reserves could be cut to $ 1.35 trillion in 8 years

These days, one of the biggest concerns among Americans – both young and old – is about Social security program will even exist in the coming years.

Recently, it seems that a new trend in terms of social security cash balance does not give people much confidence. According to personal finance writer Georgina Tzanetos at GOBankingRates.com“For the first time since 1982, Social Security’s investments have actually lost more than they have brought in.”

She added that “Social Security’s investments work much like any traditional balance sheet. Every year, the total turnover is determined in the form of the taxes taken out of our payslips every two weeks. Social security is financed through payroll tax dollars, and since 1982, one year before its last major bipartisan audit, the program has consistently brought in more revenue each year than it has paid out. ”

In fact, “from then until 2020, Social security assets has risen from $ 25 billion to almost $ 3 trillion. “

Pandemic Fallout

However, since the ongoing coronavirus pandemic took root in the country about two years ago, there has been a dramatic shift.

“An already aging baby boomer population and global pandemic were a driving force enough for a massive wave of layoffs and early retirement that began in late 2020,” Tzanetos writes. “This sudden pressure on distributions was enough to deplete social security cash reserves so much that for the first time in history it is in the red.”

Even more miserable for this situation is the fact that the discharge is only expected to get worse. Over the next eight years, Social Security’s cash reserves could potentially be cut to $ 1.35 trillion, the Social Security Board says.

This may not fit well with future retirees who expect social security to be present so they can help fund a comfortable, decades-long retirement.

According to TransAmerica Center for Retirement StudiesA humongus 73 percent of workers who responded to a survey stated that they agreed with this statement: “I am concerned that when I am ready to retire, social security will not be there for me. ”

Congress must act

Moreover 2021 Social Security Trustees report has proposed that retirees in 2034 will begin receiving a reduced benefit if Congress does not address the long-standing funding problems for the social program.

However, according to AARPIn the foreseeable future, steps can be taken to keep the Social Security program running for the foreseeable future.

“As long as workers and employers pay payroll tax, social security will not run out of money. It is a pay-as-you-go system: Revenue coming from FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) ) taxes largely cover the benefits that go out, ”the group writes.

“Social security faces financing challenges.… (But) to avoid this result, Congress would have to take steps to strengthen social security finances, ”it continues.

Ethen Kim Lieser is a science and technology editor in Washington state who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek and Arirang TV. Follow or contact him at LinkedIn.

Image: Reuters.

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