The question of Social Security, and how long into the future it can remain solvent, is very much in the news these days, following the release last month of the latest Social Security Trustees’ Report. That report found that the main Social Security trust feed will “dissipate” by 2034, or a year earlier than previously projected.
“The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain,” Kilolo Kijakazi, Acting Commissioner of Social Security, said in a statement issued in August by the Social Security Administration. “Yet, Social Security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”
Does this mean that Social Security will go away on that date? No, it doesn’t. It just means that is the date when, if no changes are made, benefits would begin to be reduced. There remain actions that Congress could take, over the course of that thirteen years, to shore up Social Security’s foundations.
A new piece published last week from Advisor Perspectives, looked closer at the health of the Social Security program while writing to an audience of financial advisors.
“Social Security’s shortfall grew by a record 18% in the last year. That $3 trillion increase means that it is more likely beneficiaries will face reduced benefits in the future, and the longer we wait the harder it will be to solve the problem,” the author, Brenton Smith, wrote.
“Generally, the average person believes that this sentence means that Social Security is a train on the same track, only a little bit closer. In fact, the report in a fuller light means is that the train now approaching is 40% bigger than it was two years ago, running on tracks that are less stable.”
The piece also looked at exactly how fast the Social Security shortfall has grown.
“In the latest Trustees Report, the shortfall (or the gap between what the program has promised and what it expects to collect over the next 75 years) grew by 18% from $16.8 trillion to $19.8 trillion,” he wrote.
“That was the largest one-year increase in the shortfall in the history of the program. Another way to look back at the year past is to say that for every $1 that the program collected, it created $3 of promises that it must keep for the program to remain solvent. This closely follows the results from 2019 when the system generated $2.9 trillion in unfunded liabilities.”
He also cautioned against the belief that “the cavalry,” in the form of Congress, will step in to save the program.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.