For some time now, people have spread rumors that Social Security might not exist when they retire. This has led to some degree of panic across Michigan. However, is it true? After all, there can’t be that much smoke without fire. Can there? The unfortunate answer is yes. Social Security is indeed running out of money.
In fact, CNN reports that Social Security has experienced a negative cash flow since 2010. In other words, the program is paying out more in benefits than it receives in taxes. There is general optimism that Congress will not abolish Social Security, but it is nonetheless in a weak position to tackle the number of baby boomers currently heading for retirement. CNN estimates that Social Security has enough money to make it to 2035.
The Social Security Administration is a little more optimistic, believing it can continue to pay out benefits on a full-time basis until 2037. At that point, the trust fund reserves will run out. Thankfully, SSA estimates that the current tax rates should sustain 76 percent of Social Security payments. As a result of this, Congress will need to make changes to fill the 24 percent gap.
If Social Security runs out of money, it will mark a dismal point in history for Americans. The program has made timely payments in full since 1935. It provides a stable income for 50 million Americans, including the elderly, the disabled, their families and sometimes the family of deceased workers.
This could also spell bad news for retirees and those heading into retirement. However, the situation may be worse for millennials who are now under greater pressure to fund retirement independently. Hopefully, in time, Congress will turn its attention to this problem before it truly reaches crisis levels.