Social Security Is Running out of Money Faster Than Expected
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The future for U.S. Social Security just got even bleaker.
On Tuesday, the Treasury Department said that the Social Security trust fund reserves have been significantly affected by the COVID-19 pandemic and the 2020 recession. The way things are going, the funds will only be able to pay scheduled benefits on a timely basis until 2034.
The Social Security Administration's website has stated plainly in the past that Social Security is "not sustainable over the long term at current benefit and tax rates." Yet millions of Americans rely on these safety net programs that are now expected to run out of money a year earlier than previously expected. This is in large part due to the devastating economic impact of the pandemic, during which the labor force shrank, lowering payroll taxes that help feed the reserves.
According to the new projections, the Old Age and Survivors Trust Fund, which provides monthly payments to retired workers, will only be able to pay scheduled benefits until 2033, one year earlier than previously expected. After that, there will only be enough money to pay 76% of scheduled benefits. Meanwhile, the Disability Insurance Trust Fund will only be able to pay scheduled benefits until 2057, then just 91% of scheduled benefits will be able to be paid. That's eight years earlier than previously expected. Hypothetically, a combination of all of these reserves is expected to be depleted in 2034.
