Social Security Is Facing a Financial Crisis, and Congress May Be Too Late to Act
Starting seven years from now, the program's benefits could look different.
Overview
There's no denying that Social Security is one of the most important social programs in the U.S., helping to keep tens of millions of Americans financially afloat. For decades, the program has held stable, but now it stands at a crossroads the likes of which it hasn't faced since the early 1980s.
From the mid-1980s through 2009, Social Security collected more money in wage taxes than it distributed in benefits. The surplus was stashed away (in a bookkeeping sense) in the Old-Age and Survivors Insurance (OASI) Trust Fund, waiting to be drawn upon when outflows exceeded inflows. That started to happen 16 years ago.
Details
Since 2010, each year's benefit payments have exceeded what the program brought in. At the expected depletion rate, the Social Security program will only be able to continue paying retirees and other beneficiaries their full benefits until the fourth quarter of 2032. At that point, the Trust Fund will run dry, and -- barring changes to the law -- the program will only have current wage taxes to cover its outlays. That won't be enough.
Source
Originally published at www.fool.com.