Thursday, September 2, 2021

Social Security Runs Out in 2034

The Social Security System is going to run onto the rocks long before young people hit retirement.  The new report from the trustees of the Social Security System predicts that the trust fund is going to run out in 2034.  That means big tax increases or benefit cuts for the Gen X, the Millennial generation and those generations to come.   

To illustrate the magnitude of the 75-year actuarial deficit, consider that for the combined OASI and DI Trust Funds to remain fully solvent throughout the 75-year projection period: 

(1) revenue would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 3.36 percentage points to 15.76 percent; 

(2) scheduled benefits would have to be reduced by an amount equivalent to an immediate and permanent reduction of about 21 percent applied to all current and future beneficiaries, or about 25 percent if the reductions were applied only to those who become initially eligible for benefits in 2021 or later; 

(3) some combination of these approaches would have to be adopted. 

Social Security is a better shape than Medicare.  

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