What Will Social Security Look Like in 50 Years?
From: www.fool.com
Every month, roughly 62.5 million people, most of them senior citizens, receive a Social Security benefit check. Better than three out of five of its aged beneficiaries rely on the program for at least half of their monthly income.
As we look into the past and examine the present, it’s pretty easy to forecast how the program will perform, as well as how much seniors can expect to receive, on average. But the question on working Americans’ minds is this: What will happen to Social Security many years down the road, when either they, their children, or even their grandchildren reach the eligible age to draw a retired worker benefit?
While virtually nothing is set in stone, here’s a crystal-ball glimpse into what Social Security may look like 50 years from now.
The program will exist
I’d give it a 99%-plus chance that Social Security will be around 50 years from now.
First, though, the bad news. The latest Social Security Board of Trustees report has forecast that $1.7 billion more will be paid in benefits than is collected in revenue beginning this year. This net cash outflow is expected to accelerate with each passing year, with the exception of 2019, according to the intermediate-cost model. By 2034, Social Security’s $2.9 trillion in asset reserves are expected to be completely gone.
However, the beauty of the program is that it’s designed to never go bankrupt. Currently, Social Security has three funding mechanisms: the 12.4% payroll tax, the taxation of benefits, and interest income earned on its asset reserves. Even if the latter, which supplied 8.5% of the nearly $1 trillion in total revenue in 2017, disappears, the payroll tax, which provides the bulk of Social Security’s income, and the taxation of benefits will continue to fund the program.
The only way Social Security doesn’t survive the next 50 years is if lawmakers in Washington change the way the program is funded, and I don’t think that will happen.
