Social Security: Trust fund in the red by 2033

(MoneyWatch) The Social Security Trustees' annual report on the state of the government retirement and Medicare trust funds is out, and the news is worrying: A challenging economy and higher energy prices have hurt the entitlement programs.

The combined Social Security trust funds are expected to be exhausted in 2033, three years earlier than projected in last year's annual report. Medicare's finances have stabilized, but the hospital insurance fund is still projected to run out of money in 2024. The most problematic program is the Social Security disability insurance program, which "faces the most immediate financing shortfall of any of the separate trust funds," according to the trustees. It is forecast to exhaust its trust fund in 2016, two years earlier than projected in last year's report.

The trustees urged Congress to take steps to shore up the programs, noting that projected long-run costs for Medicare and Social Security "are not sustainable under currently scheduled financing, and will require legislative modifications if disruptive consequences for beneficiaries and taxpayers are to be avoided." Yet few, if any, political observers expect any significant legislative action until after the November election.

When Socal Security's expenditures exceeded the program's non-interest income in 2010 for the first time since 1983, many talked about it "going broke." That's not exactly what would happen. Social Security is a "pay-as-you-go" system. That means that a current worker's Social Security taxes pay a current retiree's monthly benefit.

For a long time, there were more workers than retirees, so a large surplus built up. But as more baby-boomers retire and the number of retirees increase relative to the number of workers paying into the system, the trust funds will be exhausted. Still, all is not lost. Even if the trust fund runs dry, tax income would be sufficient to pay about three-quarters of scheduled benefits for another 50 years or so.

Social Security facts:

-- More than 56 million retirees, disabled workers, spouses, and surviving children of deceased workers receive benefits

-- The program is financed by employers and employees, who each pay a 6.2 percent tax on the first $110,000 of a worker's wages

-- Congress temporarily reduced the worker portion of the tax to 4.2 percent for 2011 and 2012, using borrowed money to make Social Security whole

-- Average monthly benefit: $1,232 for retirees; $1,111 for disabled workers. Benefits are indexed annually for inflation

Medicare facts:

-- About 50 million beneficiaries, including retirees 65 and older and people under 65 with permanent disabilities are covered

-- Medicare is financed by employers and employees, who each pay a 1.45 percent tax on all wages; Medicare beneficiaries also pay monthly premiums for outpatient and prescription coverage

-- Medicare average spending: About $12,500 a year per beneficiary, with the highest-cost 10 percent of beneficiaries accounting for about 60 percent of total spending

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME

[Carly_EngageAmerica]

Administration has found reasons for funds to be pulled away from Social Security toward other ends, but this may prove dangerous for a number of reasons. The borrowing that has taken place from Social Security has created a substantial government liability to the fund. Many point to the enormous general deficits and argue, justifiably, that the federal government may not be able to honor its commitment to Social Security.

Even if the government is able to repay what it has borrowed, however, this does not address the true danger. As the government continues to shift money between the two funds, the delineation between Social Security and other programs will become muddled and distort funding priorities. This was not the intention of the creators of Social Security when they made provision for a distinct trust fund and a separate revenue form in the payroll tax.

Should the government wish to continue to ignore the intended autonomy of the Social Security trust fund, it should take this policy stance to its natural end: Social Security revenues and liabilities should be pooled into the general budget (http://******/y5hMvv).

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME

[occupy_cbs]

During the reign of saint ronnie, despite conservative's need to worship him as a tax-cutting, ultra-conservative, once the budget deficits grew considerably, he convinced Congress to raise taxes several times.

One of those times was the increase in FICA payroll taxes to save Social Security and Medicare.

Now, with 80 million baby boomers retiring over the next 19 years -- 10,000 each and every day -- we need slight tweaks in the payroll tax so that the RED INK doesn't start in 2033 -- 21 years from now!

Fact is, saint ronnie would do it, since he did it in the 1980s, but the republican party full of teabagging extremists are afraid of ALEC and the lobbyist, grover nitwitt, and their idiotic ideology!

I imagine that just raising the $105K cap to $150K or even $200K would suffice to fix SS, since just small tweaks to the system would make it solvent for generations to come!

But, with the obstructionist republicans today, they would rather not, since it's just something else they can wrongly blame on Obama!

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME therefore revenue to secure social security

[adamic2k10]

Are you kidding me? I paid millions in to SS for my employees and myself. That won't fix a damn thing. Did you get F's in math? Here read how this was sold to the American public when enacted http://www.crystalbull.com/Social-Security-ISC9/ People who make a lot of money pay all the taxes! That's why I just work for myself and don't have 17 employees any more. OUR government was never supposed to do these things. It is up to individuals to save money! When SS was enacted people died 8 months after retiring. So what you are saying is I didn't work hard and I didn't study so I deserve other people's money. Right? Wrong! You live in one of the wealthiest countries in the world. Are poor are fat. Every time a person try's to fix this they are made to look like they are stealing grandpa's money but I have yet to read a bill that ever did such a thing. Ignorance will get you no where.

[Marian410]

In 2011 the employee contribution was lowered to 4.2% and the employer paid the full 6.2% per employee. I said then that there would be a problem, now you can see the problem. This is one reason I am taking early retirement, coupled with the fact that I cannot find full-time employment. I can still earn 15,000 with my social security, so I will be ending up with as much as I am currently earning, working here.
The economy is so bad, that of course the government will tell you that you are still young, and to wait until 70 to get a bigger check. When in reality, they are hoping you will not live to see 70.

[TimeToEvolve]

Simple: raise the cap to include everyone. No matter how much money you make. The rich owe the rest of us for their wealth since they did not make it on their own.

[Lindag10]

The problems CAN be fixed with some simple tweaks. Eliminate the salary cap, raise the tax a fraction of a percentage like to 6.7% and then the fund can be made solvent again. Commonsense doesn't work in Washington D.C. though.

[endrepubs]

Just remember.....your Republican representative is working hard to speed up the demise of Social Security. This is a Republican wet dream.

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME

[whozzzzure]

Simple solution. Everyone pays the tax up to $200 grand in salary. Problem solved. The vast majority of us are paying for the social security and never make more than the max when we don't pay. Just up the maximum taxed to $200 grand, and there are no problems.

Oh, I forgot. That makes the most well-off of us having to pay more, even though would get more -- but that won't work, because they won't need social security.

[democracy8]

ELIMINATE the ceiling altogether on earned income! Why should someone who has more than they know what to do with get a break more than those who are working and struggling to pay their bills?

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME

[ramrod42]

The "Politian's" have ALWAY'S stolen from Social Security ! We NEED to get them ALL out !

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME

[fedup12]

Been paying in to this since I was 14.

Fix it. Fix it now.. and dont play politics with it.

[Rick03466]

As someone who is 54 and has been paying into this nightmare since I was 14 I will happily sign the forms surrendering every penny I have payed in IF it gets this national fraud off the backs of My children and grand children!
Social Security as it stands is GOING TO FAIL. We should be planning its controlled end. Period,

[jtdev1]

just to give you an example of the alternative:

My 401K is still not where it was in May 2011. In other words, they (Vanguard) used my money that I had in there AND every penny I contributed AND every penny my company matched for 1 year without paying one single penny. In fact the balance is over $2000.00 LESS than what I had in there May 2011.

At that rate, I will have pretty much NOTHING (after taxes) to retire on.

At least with Social Security, there will be SOMETHING left for me to stop working maybe when (if) I reach 70.

So you want to take that away too?

[democracy8]

Rick03466: Do you have ANY clue as to why SS was created in the 1st place?

[Mathion]

Remove the maximum taxable income cap.

Problem solved.

[democracy8]

It appears that most of America agrees with you. Why should people who have more money than they know what to do with get a better break than those who are working and struggling to pay their bills? Yet you'll see some who want to make all kinds of excuses for that, even though they themselves fall into the latter category.

[auntc3]

make congress and the GOP and BIG BUSINESS pay back to Soc Security what they borrowed for their private ventures fine them BIG TIME.this was not their money to dip into this money belong to SENIORS this was their form of pension....or Seniors should issue a CLASS ACTION LAW SUIT against them....BIG TIME there for revene to secure Soc Sec.