More than 50% of US workers over the age of 60 are planning on postponing retirement, reports Jack Otter, Associate Publisher of Barron’s Wealth and Asset Management.
In some ways that’s good news for those of us who are retired. It means that income will still be coming into the Social Security Fund…for now. At the present time statistics show that it’s a 2 for 1 status. That is, 2 workers putting into the fund for every 1 receiving social security benefits.
However, when baby boomers retire there will be less being put into the fund but more taken out and when GenXers and millennials retire there will be even less going into the Social Security pot. All because legislators saw Social Security as a surplus fund for them to spend not thinking about the general public’s retirement future. When you spend what isn’t yours it will always come back to haunt you and it looks as though it’s happening.
Congress has been borrowing from the Social Security fund since its inception and replacing it with IOU’s–a fact from SS website. They have borrowed 2.85 TRILLION so far from the beginning! But it’s not worth anything!
Here’s what’s been happening since the beginning. Employers send what they have deducted in income tax and Social Security and Medicare payments from each employee to the Federal Treasury. The Federal Treasury then pays out Social Security and Medicare benefits. After crediting the Social Security trust fund with the proper amount in IOUs, the government spends the extra Social Security tax collections just like any other tax revenue–to finance anything from aircraft carriers to education research.
So in actuality, the Treasury bonds are empty. They’re worth nothing. According to the Office of Management and Budget(CBO) in 1999: “they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”
The real problem is coming in the next two years when the baby boomers, born from 1957 though 1964 start to retire. 1957 was the largest year in births between 1946 and 1964. So beginning in 2022 if boomers decide to retire at 65 rather than waiting, things could change drastically.
Either cuts will have to be made in benefits to seniors already receiving social security benefits or taxes will have to be raised or both. This was the conclusion that came to the attention of Senator Paul Ryan back in 2008 before he became Speaker of the House, when he asked the CBO for an analysis of the potential of the future problems with Social Security.
According to the 2018 report released by the trustees of Social Security and Medicare, the fund will have enough up through 2034, then a senior’s full benefit payment will have to be cut by 21 percent, unless reforms are made.
We need to tighten up our belts, seniors. Or plan for additional means to supplement social security income for possible tough times ahead!