Of these income streams, only social security has proven to be stable and strong. Not only is it the largest source of income for most retirees, but it has also never missed a monthly payment since it cut its first check to Ida May Fuller in 1940. That may be why so many Americans are concerned about its health. A 2020 AARP survey showed that 57 percent of Americans are unsure of the future of the program. ,
“Those who tend to distrust the government seem to have less confidence that social security will be there for them in its current form,” said Michael Baughman, a financial planner in Tryon, North Carolina. “And when you work with younger clients, there is even less trust in social security.”
Although concerns about the program are hardly new, with younger Americans typically more dubious than older ones, skeptics have a point. Social Security’s finances are undoubtedly on a downward slope, and arranging them is primarily in the hands of the US Congress. If no action is taken, the moment of crisis – that is, when the program would no longer have enough money to fully pay its promised benefits – will occur in a little over a decade.
While there is plenty of reason to suspect that Congress will pull its feet, it is likely that pressure will build up to act before that moment. But it can be very close to the deadline. “Any reform that is politically feasible requires things that both parties hate,” said Reid Ribble, a former Republican congressman from Wisconsin’s 8th District. “Republicans have never wanted to increase revenue, and just dealing with it on the benefits side is not politically possible.”
Popular and restless,
Social security is one of the most successful anti-poverty programs this country has ever created. Without social security benefits, 21.7 million more Americans would be below the poverty line, according to the Center for Budget and Policy Priorities. ,
Social security does more than send eligible retirees a monthly payment. It also provides ongoing income for surviving spouses and their children. Social Security Disability Insurance (SSDI) helps pay the monthly bills for skilled disabled workers and their families. Although most of those whom social security keeps out of poverty are older adults, 6.9 million are under the age of 65, including 1.2 million children.
Not surprisingly, Social Security has broad support. “It is crystal clear that Americans of all generations value the economic stability that Social Security has offered for the past 86 years – even more so as we face the health and economic challenges of a global pandemic,” said Nancy LeaMond, AARP executive vice president and chief. advocacy and engagement officer. .
But there are problems on the horizon. Without any legislative changes Social security funds – the financial accounts that the program deducts when the annual payments to Americans are greater than the annual tax collections – will be out of money in about 12 years. At that time, the program would only have current tax revenues to fund payments with; Calculations show that it would only cover 78 percent of the promised services. ,
For Congress, 2034 is far away. But the faster the legislator acts, the faster and easier it will be to strengthen the trust funds’ reserves due to simple math: Smaller revenue or benefit changes made now will accrue over time, which is a far more effective way to secure the funds. than paying for a major repair job at the last minute.